CLKent23 Posted October 24, 2018 Posted October 24, 2018 I have a current small client (approx 15 employees), with a 401(k) Plan with elective deferrals and is 3% Safe Harbor Non-elective Maybe. The client is deciding on whether to amend to Safe Harbor for the 2018 plan year, so that we can send the required 30 day notices ASAP. Question - the plan currently applies the SHNEC to ALL participants, but the client is considering Excluding all HCE's from the allocation in the future, which consists of about 4 employees besides himself. Can he make this part of the 2018 SH amendment and notify participants now that they the HCE's will not receive a SHNEC for 2018? Or must he wait and amend the plan for 2019 to Exclude HCE's from the SHNEC? Thank you!
Larry Starr Posted October 25, 2018 Posted October 25, 2018 3 hours ago, CLKent23 said: I have a current small client (approx 15 employees), with a 401(k) Plan with elective deferrals and is 3% Safe Harbor Non-elective Maybe. The client is deciding on whether to amend to Safe Harbor for the 2018 plan year, so that we can send the required 30 day notices ASAP. Question - the plan currently applies the SHNEC to ALL participants, but the client is considering Excluding all HCE's from the allocation in the future, which consists of about 4 employees besides himself. Can he make this part of the 2018 SH amendment and notify participants now that they the HCE's will not receive a SHNEC for 2018? Or must he wait and amend the plan for 2019 to Exclude HCE's from the SHNEC? Thank you! Rarely have a maybe plan because almost all of our plans are top heavy. But, I don't think you can CHANGE anything for 2018; the notice is that you will (or will not) do what you originally said the provision was; it's do it or not do it. If HCEs deferred knowing there MIGHT be a 3% contribution and then you do the 3% but say "Wait, not for you guys!", I think you have a problem. Make the change for 2019. Lawrence C. Starr, FLMI, CLU, CEBS, CPC, ChFC, EA, ATA, QPFC President Qualified Plan Consultants, Inc. 46 Daggett Drive West Springfield, MA 01089 413-736-2066 larrystarr@qpc-inc.com
Bird Posted October 25, 2018 Posted October 25, 2018 Agreed, I don't think you can change it. Ed Snyder
CLKent23 Posted October 25, 2018 Author Posted October 25, 2018 Thank you both - this was my thought process as well, but wanted to be sure.
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