Incorrect safe harbor contribution deposited

the plan sponsor went from a basic safe harbor match in 2018 to a safe harbor non-elective in 2019.  unfortunately, the basic safe harbor match deposits were still being made during all of 2019.  Can we do a self-correction?  If so, I'd like to just reclassify the funds as SHNEC but some participants may have overages if they were deferring over 3% of pay.  Can I just forfeit the overages?  Do I have to calculate earnings on the overages to be forfeited?

I would move as much as possible from SHM to SHNEC (with earnings!)

The rest (including earnings) gets put in a suspense account (it doesn't get "forfeited"; these are not non-vested funds) for use to offset future ER contributions.  In fact, there cannot be any Employer contributions until that suspense account is exhausted.  Those funds cannot be used to pay fess.

See EPCRS.

As to actually moving them, does it really matter?  They both have the same vesting schedule (unless the are QACAs with 2-yr cliff) and same withdrawal restrictions.

Will there be a Profit Sharing this year?  If so, just move the "overages" to the PS account (inclusive of earnings, of course)

To the others:  is there a problem if a bigger percentage of HCE vs NHCE got these matches throughout the year?  I'm guessing people who did not defer got nothing.  For example if the two owners got their match and only 3 of 10 NHCE were deferring, you have all the HCEs getting the ostensible benefit of the SH contribution being in the market during the year against 30% of the NHCE.

Lorraine Steinberg, I think you need to do a deeper dive on the facts. If, at one extreme, the 2019 plan document says the employer will make an SHN, and no matching is permitted, or match will only be contributed at end of year, then arguably you are correcting an error by moving all the funds out of matching and in fact have to do that to keep plan qualified. On the other, more likely set of circumstances, the matching that has been contributed could be construed as discretionary payroll matching (if plan permits, and even worse if employee communications arguably said), you could have a real issue. Again, really need to analyze plan docs and employee communications to know, also internal payroll and TPA communications, e.g. were the deposits listed as SH matches, that sort of thing.