Amendment Required

Client has a 401 (k) Plan with 3% Safe Harbor.  Owners are not going to contribute to 401 (k) in 2025, till the Plan Terminates. Both Highly Compensated and Non Highly Compensated will continue to defer.

Is an amendment required?  Material Modification?

Have a good weekend.  Thank you.

DPSRICH

I don’t understand what you mean the owners are going to do. Seems off. 
 

But if you’re asking about an amendment to terminate and bring the plan up to date with all legislation, yes. And an SMM is required as well. 

23 hours ago, Bill Presson said:

I don’t understand what you mean the owners are going to do. Seems off. 
 

But if you’re asking about an amendment to terminate and bring the plan up to date with all legislation, yes. And an SMM is required as well. 

Sorry Bill, what I mean is the owners will no longer defer into the Plan, for however long the Plan will contine.

Thank you.

Richie

Sounds like what you only need is signed deferral elections for the owners indicating $0.

My testing is rusty--is there an advantage in testing if the owners are not contributing by choice, vs. non-contributing because they are excluded employees by terms of an amendment?

The plan has a 3% Safe Harbor Nonelective Contribution, so there is no need to test ADP.  From an ADP standpoint, it doesn't matter if they defer or do not defer.

If the owners do not want to get the 3% SHNEC, then they would have to be excluded from participating in the SHNEC.  Since a plan does not have to give an SHNEC to HCEs, I expect an amendment that excluded just the owners from the 3% SHNEC would not invalidate the safe harbor.

On 1/27/2025 at 8:31 AM, Bri said:

Sounds like what you only need is signed deferral elections for the owners indicating $0.

Thank you. Just what I thought.