Can Prior Year Safe Harbor be stopped for HCE?

Due to current economic hardships, plan sponsor would like to not make safe harbor contributions for the HCE's (all family member owners) for the prior plan year. Is this actually possible? They'd also like to stop current year to date safe harbor contributions to themselves.

We just had a similar discussion last week

EDIT:  I see you were talking about a prior year issue. I linked to a thread on prospective suspension for HCEs

As for prior year, yes I believe it is doable under VCP, but unless you are talking about a decent amount of SH contributions you want to avoid, that may be cost prohibitive. 

Thank you for that link.

I'm just trying to find ways for this small business to not terminate their plan. Currently, due to pandemic, the company has zero income and has terminated (not furloughed) all NHCE non family employees. There is no way they will pay for a VCP.

As explained in thread referenced above by RatherBeGolfing, there is an argument that it may be permissible for current year safe harbor contributions for HCEs, at least in some circumstances depending on plan language. Would seem too late if you are talking 2019 plan year. With any luck IRS will address the issue of suspending safe harbor for HCEs in current year, since a hot topic right now.

11 minutes ago, Luke Bailey said:

As explained in thread referenced above by RatherBeGolfing, I and some others think there is an argument that it may be permissible, at least in some circumstances depending on plan language.

For a prior year?

On ‎4‎/‎21‎/‎2020 at 12:34 PM, RatherBeGolfing said:

We just had a similar discussion last week

EDIT:  I see you were talking about a prior year issue. I linked to a thread on prospective suspension for HCEs

As for prior year, yes I believe it is doable under VCP, but unless you are talking about a decent amount of SH contributions you want to avoid, that may be cost prohibitive. 

Seems like it would be a tough sell in VCP since would be a reduction in accrued benefit, but maybe IRS would do. I've never asked for that in VCP.

2 minutes ago, RatherBeGolfing said:

For a prior year?

No. I made the same mistake you did initially regarding the year being referenced in the OP, so have edited my response. Thanks for pointing out.

5 minutes ago, Luke Bailey said:

Seems like it would be a tough sell in VCP since would be a reduction in accrued benefit, but maybe IRS would do. I've never asked for that in VCP.

I haven't either, but I know a great ERISA attorney who has, and he didn't see a problem with the facts in my situation.  I think the fact that all HCEs are owners make it an easier sell than retroactively reducing non-owner HCEs who presumably have no say in the reduction.

2 hours ago, RatherBeGolfing said:

I haven't either, but I know a great ERISA attorney who has, and he didn't see a problem with the facts in my situation.  I think the fact that all HCEs are owners make it an easier sell than retroactively reducing non-owner HCEs who presumably have no say in the reduction.

OK. Good to know. Thanks, RatherBeGolfing.