Plan does not want to make Safe Harbor contribution-what happens?

I have a plan that is asking if they can not to a Safe Harbor (3% NE) contribuiton for 2022. Their document states that there will be a SH contribution But only if the plan sponsor provides a follow-up notice. I have not seen that language before on an adoption agreement. 

I'm not sure if that qualifier gets them out of having to make one,Edited: they did not distribute the notice last year

Also, if they are supposed to make the contribution and do not, The plan is out of compliance, but I'm not sure what would happen after that. 

Was there a notice sent last November stating there MIGHT be a 3% SH for 2022?  if so, they can certainly opt out by sending a 'nope, not gonna do it" notice.

Does your document have a question that looks something where option 3 is selected?

Safe harbor nonelective contributions (select one)
1. [ ] 3% contribution. The Employer will make a nonelective "ADP test safe harbor contribution" for the Plan Year to the Account of each "eligible Participant" in an amount equal to 3% of each Participant's Compensation.
2. [ ] Stated contribution. The Employer will make a nonelective "ADP test safe harbor contribution" to the Account of each "eligible Participant" in an amount equal to ___% (may not be less than 3%) of each Participant's Compensation.
3. [ ] "Maybe" election. The Employer may elect to make a nonelective "ADP test safe harbor contribution" after a Plan Year has commenced in accordance with the provisions of Plan Section 12.8(h). If this option d.3. is selected, the nonelective "ADP test safe harbor contribution" will be required only for a Plan Year for which the Plan is amended to provide for such contribution and the appropriate supplemental notice is provided to Participants.

13 hours ago, Lou S. said:

Does your document have a question that looks something where option 3 is selected?

Safe harbor nonelective contributions (select one)
1. [ ] 3% contribution. The Employer will make a nonelective "ADP test safe harbor contribution" for the Plan Year to the Account of each "eligible Participant" in an amount equal to 3% of each Participant's Compensation.
2. [ ] Stated contribution. The Employer will make a nonelective "ADP test safe harbor contribution" to the Account of each "eligible Participant" in an amount equal to ___% (may not be less than 3%) of each Participant's Compensation.
3. [ ] "Maybe" election. The Employer may elect to make a nonelective "ADP test safe harbor contribution" after a Plan Year has commenced in accordance with the provisions of Plan Section 12.8(h). If this option d.3. is selected, the nonelective "ADP test safe harbor contribution" will be required only for a Plan Year for which the Plan is amended to provide for such contribution and the appropriate supplemental notice is provided to Participants.

 

Yes, that's more of less the language. I haven't seen a "maybe" provision in practice. 

16 hours ago, BG5150 said:

Was there a notice sent last November stating there MIGHT be a 3% SH for 2022?  if so, they can certainly opt out by sending a 'nope, not gonna do it" notice.

Correct me if I am wrong, but doesn't the FTW Document Maybe language from November 2021 say something like "We will tell you by November 2022 if we are going to make it for the 2022 year". I don't believe there is a notice that says "No, we are not going to make it". Just the notice that says "Based on what we wrote last year, we ARE going to make it for 2022". Again, I could be wrong.

2 hours ago, Gadgetfreak said:

Correct me if I am wrong, but doesn't the FTW Document Maybe language from November 2021 say something like "We will tell you by November 2022 if we are going to make it for the 2022 year". I don't believe there is a notice that says "No, we are not going to make it". Just the notice that says "Based on what we wrote last year, we ARE going to make it for 2022". Again, I could be wrong.

you're right, I just found the notice. 

2 hours ago, JHalligan said:

you're right, I just found the notice. 

We've been doing it this way from the beginning. It gives clients max flexibility. We do* issue a notice that says "no we're not" if that is the case, but I agree that it is probably not necessary.

*Did. Under the new law, we have all of our SHNE plans as NOT SH and simply amend them in November; no maybe notice needed.

Yeah, I think the OLD rules were that you had to say in 2021 we may do it and in 2022 you had to say yes/no and then say we may do it in 2023...

Did PPA change that?  Now only a 'yes' notice is needed?

1 hour ago, BG5150 said:

Did PPA change that?  Now only a 'yes' notice is needed?

You have to amend it to include the SHNEC, and the notice.