Suspending SH Election, Adopt 3% Nonelective by Year-End Under SECURE

Hello, I have seen a few suspension of the SH election questions already, but didn't see this question addressed. If we have a client that wants to suspend their SH election now (either the 3% safe harbor or the match, doesn't really matter), can they elect to become a safe harbor plan later in the year or after year-end based on the provisions in the SECURE Act? 

We are wondering if this is a way out of the cash flow requirements now and a possible fix later on if things turn around to avoid refunds. 

Before discussing this as an option with clients I am looking for some guidance one way or the other.

Thoughts? 

I think it matters (NE vs match), at least in terms of how they are stated in the document.  Match for sure has to be hard-coded at the beginning of the year, and no, I don't see any way to turn it off and back on.  If your nonelective is hard-coded* then the answer would be similar.  If your NE is of the "maybe" type (or not in the document at all thanks to the SECURE Act) you can turn it on in November (or after the end of the year to the tune of 4%).

*All of our plans (except maybe 1) use the maybe provisions.  Am I missing something about hard-coded provisions and the SECURE Act...? It did not void them, it just made it so you could add SHNE provisions during the year, and don't have to give the notice.  So a hard-coded SHNE is just that, hard-coded, and the only difference is that you don't have to give the notice.  Stopping it requires the "maybe not" notice or business hardship, correct?

Right, so let me clarify. Document has hard-coded that it is a safe harbor plan for 2020. Business is having a hardship right now due to Covid-19, and wants to stop the safe harbor for 2020.

The SECURE Act allows you do adopt a safe harbor plan by November 30th (3% nonelective) or by due date of tax return (4% nonelective). A plan that is not safe harbor can then adopt those later on based on SECURE.

So my question is the client that had a safe harbor in place at the beginning of the year, stops it right now due to Covid-19, and then, if things turn around later, can they become a safe harbor again?

I think this should be acceptable. One thing to consider is that you can not use the ACP safe harbor with a SECURE Act retroactive safe harbor. So if the plan was SH match before suspending, and then later becomes SH nonelective, the matching contributions will still have to be ACP tested.

One argument against allowing it would be that notice 2016-16 prohibits a mid-year amendment to change the type of safe harbor (e.g. from match to nonelective). Obviously this predates SECURE, but I don't think it applies in any case, since we are not amending the safe harbor - we are terminating the existing safe harbor, and then at some later date, adopting an entirely new safe harbor regime. A better approach in this case might be to adopt the SECURE safe harbor after the end of the year, thereby making it not a "mid-year" amendment to which 2016-16 would apply.

So they'd be SH for part of the year, stop, then retroactively be SH again by amending under the SECURE Act provisions?  That's an interesting thought.  My initial reaction is no but with the ability to retroactively become SH, maybe...I wonder if you'd have to somehow overlap b/c the amended SH has to cover the whole year.

So you would have safe harbor match for part of the year, which is now ACP tested, and 3% nonelective for the entire year to avoid ADP?