Determine if SH plan annually

I have never given a client the option, but a financial advisor is asking the question...

Can the plan sponsor decide year to year if their plan is a SH plan or not?  and if so, how does this work?

I know that to be a SH Match, for an existing plan they must decide prior to 1/1 of the new plan year... but a plan can switch mid year to a SH plan by 12/31 if they add a 3% NEC SH contribution (after 12/31 if the NEC is 4%).  Ok, say they did that... that would be amending the plan which would mean the plan is now a SH NEC plan moving forward.  To go back to a non-SH plan, well, another amendment switching the plan back?   I'm getting dizzy just thinking of amending the plan each year.  But.. is that how it is done?  Or maybe I am totally off... you can't do this year to year.  

Of course you can do SHNEC each year but you do have to do an amendment. As you note, you can amend to 3% by 11/30. If you want the next year to start off NOT a SH, just include that in the 3% amendment by saying it’s only for XXXX year. So one amendment per year. 
 

Now I think that’s a real PITA but it can be done. Participants might not like it so much. 

Bill the yearly amendment requirement is not in all pre-approved plan docs. Some documents have the "maybe" provision.  Says each year we'll determine whether we're SHNEC or not.  Will let you (participant) know via notice (which contains answer for current year and continues maybe to next year). No amendment required. If using that method, review your pre-approved docs.

I think the Safe Harbor "Maybe" plans were much more prevalent prior to SECURE.  Now that the retroactive amendment to 3% SH Non Elective if done by 12-1, or 4% if after 12-1 that is how most now operate.  For those plans you issued the "maybe" notice by 12-2-2025 for the 2026 plan year and the definite notice by 12-1 -2026, then the next plan year notice was due by 12-2. Most document providers combined that into one notice that was due 12-1.   I think most are no longer doing that as they can now choose to adopt a Safe Harbor for the plan year they are in as long as they do it by 12-1 for the 3%, or later for the 4%.  SECURE also eliminated the notice requirement for the SH Non Elective, but in practice most still provide it because in that notice it says they have the right to remove the SH mid year.  If you elect not to provide notices then you can't amend mid year to remove it (other than proving economic loss).