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Safe harbor 3% Nonelective contribution


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I have a 12/31/2024 Plan that want to amend the safe Harbor 3% non-elective contribution out of their plan for the plan year being 1/1/2024,  can they amend the plan now to eliminate the  3% safe harbor contribution out of the plan for 2024?

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Assuming this is not a "maybe"plan, then the answer is generally no for 2024 unless you meet one of the exceptions such as operating at an economic loss or or a business transaction such as sale or merger.

In both cases you generally have to give 30 days advance notice to the the employees and make the SH contributions through such time in the notice.

See IRS notices 2016-16 and 2020-52 for additional information on midyear SH changes.

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  • 5 weeks later...

sorry this is super late, but i think you can stop SHNEC as long as you have the language in your notice.  It doesn't have to be for an economic loss.  This is what ours says:

Notwithstanding any language in this Notice to the contrary, we reserve the right to amend the Plan at any time during the Plan Year to reduce or suspend the safe harbor contribution. If we decide to reduce or suspend the safe harbor contribution, we will provide you with a supplemental notice at least 30 days prior to the effective date of such reduction or suspension describing the consequences of the amendment. Any amendment to reduce or suspend safe harbor contributions will not affect any contributions earned prior to the effective date of such amendment.

 

Below is from Lord Abbett:

  1. Employer must have included in their safe harbor notice, which is required to be delivered annually to plan participants, a statement that the plan may be amended in the upcoming year to suspend or reduce safe harbor contributions and that the suspension or reduction will not apply until at least 30 days after all eligible employees receive an additional notice of the suspension or reduction. If this statement is included, the safe harbor contribution may be reduced or suspended for any reason.
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