3% nonelective safe harbor notice

[Tom]

We've continued to provide the 3% notice even though the requirement has changed.  A typical plan for us is 3% FIXED in the document nonelective safe harbor and profit sharing.  My understanding has been if there is no discretionary match then the notice is not required.  I went to ChatGPT which said it could be required if the safe harbor "interacts" with profit sharing.  The explanation was lacking. I don't know what it means by that,

This is a plan with 350 participants and i didn't want to burden the sponsor with the distribution as it is not distributed by the record keeper.

Thank you

[Lou S.]

If it's a "maybe 3%" or you have any match, then my understanding is you still need the notice. 

If you have a hard 3% and no match, then the notice is not required.

That's my understanding but if that's wrong I'd love to know what the correct answer is.

I'm not sure what "interacts with the profit sharing" means in this ChatGPT context. As that's not a term I've seen in safe harbor before.

[John Feldt ERPA CPC QPA]

If the employer might ever want the easy way out of safe harbor during the plan year, then provide the notice and make sure it includes the language that says the employer can amend to exit safe harbor at any time after providing a 30-day advance notice to participants, ending safe harbor contributions thereafter.

If the 3% is a QACA SH nonelective and the plan has a match exempt from ACP, even without the notice you can still find the match and avoid ACP. But only if it’s QACA.