BG5150 Posted July 2, 2019 Posted July 2, 2019 Have an existing 401(k) Plan that someone (not me!) added a SH match to effective 4/1. Obviously this is not allowed. What is the remedy? Send a "Sorry that you got that SH notice, but you really didn't need to..."? Amend the doc to not have the SH features. Good thing is, there was already a stated match in the plan which was the same as the SHM. Testing should not be a problem. QKA, QPA, CPC, ERPATwo wrongs don't make a right, but three rights make a left.
Bri Posted July 2, 2019 Posted July 2, 2019 I think that's all you can do - let the employees know the safe harbor rules can't apply, but you will keep the match you already got. (Does the other-allowable match come with a vesting schedule, though? May want to amend to fully vest the amounts already gone in erroneously, if you have the ability to track it.) --Bri (another BG who happens to love the 5150 VH album, and likes Bart but not to the point of making him my avatar!)
BG5150 Posted July 2, 2019 Author Posted July 2, 2019 I believe the stated match is also 100% vested. QKA, QPA, CPC, ERPATwo wrongs don't make a right, but three rights make a left.
JackS Posted July 2, 2019 Posted July 2, 2019 They can make the contributions, they just are not allowed to rely on the testing exemptions. You should probably notify the HCE's and determine how best to test the plan for the year - you may be better off with prior year testing.
BG5150 Posted July 3, 2019 Author Posted July 3, 2019 Fortunately, testing is not an issue. QKA, QPA, CPC, ERPATwo wrongs don't make a right, but three rights make a left.
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