SH 401(k) switch between SH NEC and SH Match

[M Norton]

In 2018, small plan sponsor adopted a SH 401(k) plan with SH match provisions, using the FtWilliam BPD.  For 2019 plan sponsor wanted to switch to the SH NEC so we prepared the SH notice with that language to hand out to employees by 12/1/2018.  Again for 2020 he wanted to do the SH NEC so again the SH notice had the SH NEC language and was distributed to employees around 12/1/2019 (right before the SECURE Act was signed).

Now that notices are no longer required if a plan sponsor wants to do the SH NEC, does the plan document need to be amended to remove the SH match language?  

Thanks.

[RatherBeGolfing]

It's a little unclear from the post, but did you ever amend from SHM to SHNE for the 2019 plan year?  The way it reads, you just did a SHNE notice for 2019 and kept it as SHM in the document.  And now you are asking whether you need to amend from SHM to SHNE, for 2020?

[M Norton]

It was our understanding that the plan sponsor could decide each year what safe harbor contribution would be made, and had to notify the employees before the beginning of the year what the SH contribution would be for the coming year.  

[RatherBeGolfing]

17 minutes ago, M Norton said:

It was our understanding that the plan sponsor could decide each year what safe harbor contribution would be made

Correct, but they still have to amend the plan document if the want to change from year to year.  How are you operating according to the terms of the plan if it says match and you do a non elective, or vice versa?

 

[Larry Starr]

3 hours ago, M Norton said:

It was our understanding that the plan sponsor could decide each year what safe harbor contribution would be made, and had to notify the employees before the beginning of the year what the SH contribution would be for the coming year.  

I think you may have a big problem; Ratherbegolfing laid it out for you.  You can have any safe harbor method you want, but the plan HAS to reflect that specific decision ("definitely determinable" and all that).  If you just switched back and forth without an amendment, you do have a problem.  

[justanotheradmin]

I agree with @RatherBeGolfing and @Larry Starr i've never seen a document (preapproved or otherwise) that allowed the type of safe harbor to be switched without an amended. 

Our document allows a safe harbor nonelective maybe without a second amendment to confirm it- but the plan document is written /amended before the start of the year to specifically say the plan might be using the safe harbor maybe, and if it chooses to do so for a given year both a before year notice and secondary (during the year notice before the deadline) will be given. in that case the operation aligns with the plan document. Our non safe harbor maybe plans don't have this written in their documents. 

In any case, that is materially different from being a regular safe harbor match or regular safe harbor nonelective. Those are guaranteed and must be reflected as such in the plan document for the reasons they stated above.