How are employees who terminated prior to the effective date of adding

[John A]

1) If an existing, calendar-year 401(k) plan distributed proper safe harbor 401(k) notices prior to May 1, 2000, and amends the plan to adopt the safe harbor method effective November 1, 2000, does an employee who terminated in September have to receive the safe harbor contribution (the employee met age and service requirements)?

2) If an existing, calendar-year profit sharing plan that did not have a CODA distributed proper safe harbor 401(k) notices prior to September 1, 2000, and amends the plan to add a CODA and adopt the safe harbor method effective October 1, 2000, does an employee who terminated in September have to receive the safe harbor contribution (the employee met age and service requirements)?

[Guest PC]

1) The answer to this should be yes. Notice 98-52 states that an end of year requirement is not acceptable for a safe harbor 401(k) Plan. I doubt the fact that you can delay the actual commitment to making a safe harbor contribution was intended to circumvent this rule.

2) The answer to this is apparently no. Notice 2000-3 Q&A 11 states in part: "In the case of a CODA that is added to an existing profit-sharing ... the CODA will not be treated as failing to satisfy the requirements of section X of Notice 98-52, provided ... (3) the requirements of Notice 98-52 are otherwise satisfied for the entire period from the effective date of the CODA to the end of the plan year."