New Safe Harbor Plan by 10/1 & notice requirement

I understand a new safe harbor 401(k) plan can be signed prior to 10/1 and effective 10/1.

However, does the notice for the new plan need to have been delivered to eligible employees by 9/1 (ie 30 days previously)?

9 hours ago, TPApril said:

I understand a new safe harbor 401(k) plan can be signed prior to 10/1 and effective 10/1.

However, does the notice for the new plan need to have been delivered to eligible employees by 9/1 (ie 30 days previously)?

There was a thread on this recently. My opinion is that the 30 days is a safe harbor but it doesn't mean you can't do it with a shorter time frame - facts and circumstances would dictate that if a plan is just set up on 9/30 you can't give 30 days notice.

Agreed

Agree as well - for brand new plans I thought the notice could be any time before effective date. Also, remember that the notice for 3% SH design is no longer required, it is optional.

But I think the plan needs to be ready to start deferrals effective 10/1 as well. I don't think you could make it effective 10/1 but then not start taking deferrals until November because the admin wasn't set up - at least that's my understanding/opinion.

I agree as well.  

The notice (if required) should be delivered to participants within a reasonable period before the beginning of each plan year.  

at least 30 days but no more than 90 days is deemed to be reasonable, but other periods can be reasonable as well.  Personally, i find it unreasonable to deliver a plan notice for a plan that does not even exist yet.  So if I sign a plan on 10/1, 10/1 is the earliest day the notice could be delivered (and I would argue that is completely reasonable).

I agree with Cusefan that the plan is supposed to be ready to accept deferrals for 3 months, so 10/1 may be pushing it unless you have a backup plan for deferrals. 

I thought the 3% s/h notice was required the first year, but then not in subsequent years.

Actually I was in a time warp - we write all of our SH plans as "not" SH and amend them into SH in November, so the advance notice is not an issue at all.

Post-SECURE Act, the notice is no longer required for a 3% safe harbor non-elective contribution to satisfy the ADP safe harbor, but you do still need the notice if you want to satisfy the ACP safe harbor.