Changing SH from basic match to 3% non-elective effective 1/1/2025

Hi

Question for 401k gurus out there.

Not a 401k person.

Existing plan with 401k/SH/PS provisions.

Called the "no name disclosed" payroll/RK company on behalf of a prospective client that I am designing a CB plan. Let's call them ZZZ

Asked ZZZ to amend the plan's SH provision from basic safe harbor to 3% non-elective effective 1/1/2025.

I was told by ZZZ that there is a 45 day rule prior to year end to change the SH, is this true?

If true, can you please provide a cite?

As a signed note, ZZZ told me that the same 45 day rule may apply to amend the PS provisions as the plan has SH in it (PS has last day rule) which I said, I do not think so.

Am I missing something here?

Thanks

There is no 45-day requirement in the law or regulations.

1.401(k)-3(d)(3)(i) requires that the safe harbor notice be provided to participants "within a reasonable period before the beginning of the plan year." Subparagraph (ii) provides a safe harbor that the timing requirement is deemed satisfied if the notice is provided no less than 30 and no more than 90 days before the beginning of the year.

The service provider may have an internal process that they can not update the plan specifications less than 45 days before the end of the year and still comply with the 30 day safe harbor.

Plans using the nonelective contribution to satisfy the ADP safe harbor are no longer required to provide a notice at all, since SECURE 1.0. However a notice is still required if the plan wants to satisfy the ACP safe harbor, even if using a nonelective contribution.

Thank you for confirming my suspicion on being ZZZ rule. Thank you for the cite as well. Thank you also for bonus ACP note.

However, I think they will need a notice especially if amending for the first year.

FWIW - my understanding is that the "30 day" notice is "deemed" reasonable. However, it doesn't necessarily preclude a shorter notice period if facts and circumstances are such that the shorter period is still "reasonable."