SAFE HARBOR ELIGIBILITY

If a company has a 401(k) plan with safe harbor contributions, and the company wants to implement a one (1) year of service requirement for said safe harbor contributions, can we implement this requirement retroactively to January 1, 2023 or do we need to specify a date in the future, since there are 2023 hires who are eligible under the current requirements - or lack there of?

Notice 2016-16 prohibits a mid-year change to reduce or narrow the group of employees eligible to receive safe harbor contributions. I think you could do either:

1. Amend the plan effective 1/1/2024 to change the eligibility requirements for everyone, or

2. Amend the plan effective immediately to set a 1 year of service requirement for employees hired after the date of the amendment, and retain the existing service requirement for current employees.