Secure Act - starting new 3% SH nonelective plan 3 month rule

[Will.I.Am]

Under the old rules (pre-Secure Act), if you wanted to start a brand new SH plan the plan would have to be in effect for three months in the initial year. I assume this rule is still valid for safe harbor match plans but what about Safe Harbor nonelective 401(k) plans? Can you now adopt a safe harbor nonelective plan in December of its first year with the new changes of the secure act? Or does the 401(k) arrangement still need to be in effect for 3 months for either type? I just want to know if the ability to retroactively amend the plan to be safe harbor up to 30 days before the end of the plan year (and even after the year is over if 4% contribution is used) under the secure act applies for the first (initial) plan year? 

[Larry Starr]

The rules changed effective 1/1/20.  You can adopt the nonelective safe harbor right up until the end of the year.  If you adopt it before the 30th day before the year end (December 1), you can have the 3% nonelective. If you go into December or later to adopt the new plan, you have to use 4% for that first year.  Of course, always remember that the employee deferrals have to occur DURING the plan year, so I'm not sure we'd ever adopt a 401(k) after 12/31, but we certainly could adopt the PS part with the 401(k) effective the following year.

Here is from ERISApedia:

 

Late Adoption of Safe Harbor Nonelective Plans   

Effective Date. This subsection is effective for plan years beginning after December 31, 2019.

Amendment 30 Days Prior to End of the Plan Year. A plan may be amended at any time before the 30th day before the close of the plan year to adopt a 3% minimum nonelective contribution for a ADP 401(k) safe harbor plan. [Code §401(k)(12)(F)(i)(I) as added by the SECURE Act 103]

Amendment by End of Following Plan Year. A plan may be amended at any time before the close of the following plan year to adopt the minimum nonelective contribution for an ADP 401(k) safe harbor plan, provided that the nonelective contribution is not less than 4% of compensation. [Code §401(k)(12)(F)(i)(II) and (F)(iii) as added by the SECURE Act 103]

[stbennet]

Any guidance on using SECURE Act to re-adopt SHNEC after cancelling SHNEC mid-year?  Will that fly?