Safe Harbor Plan Mid Year Changes

I have a client with a safe harbor nonelective contribution plan that wants to exclude Christmas bonuses from contributions for 2020.  My first thought is that this is a "reduction" in the contribution and, as provided in Notice 2016-16, can be done as long as a notice is given. However, the SECURE Act made it so there is no notice required for the SHNE safe harbor plan.  The more I read my research materials the more confused I become - is this mid-year change allowed?  If so, does ADP apply? Is there a notice required? 

I don't think it would be allowed.  They got rid of the notice (IMO) to save on paperwork/hassles, not to liberalize rules.  Think of it as a PS allocation where there are no hours requirements; you can't change anything that would change the allocation once you are into the year.  All of this assumes the SH is hard coded into the plan.  Although, if it is not hard coded, I think the only thing you can do is elect or not elect it, not change definitions.

Having said all that, I don't see how you could exclude bonuses from SH comp anyway.

Pay the bonuses on 1/1/2021.

18 hours ago, Luke Bailey said:

Pay the bonuses on 1/1/2021.

Ding...ding...ding!