2021 401k+SH plan set up deadline

Hi

With all the changes going on, want to confirm the following just to be on the safe side:

If a new plan for 2021 with SH provisions, has to be set up by 12/31/2020, correct?

If a new plan but no SH provisions, can still add SH for 2021 by December 1, 2021, correct?

Last, for a non-elective SH, unless I want to have a "may be" provision, no need for a notice, correct?

What is the HCE's are excluded from SH, is not providing a notice still an option?

Thank you

Jak, the deadline to set up a new SH plan for 2021 is 10/1/21 because it has to be in existence for 3 months. For a SH match, you have to include it in the document and provide advance notice. For SH nonelective, you can include it from the beginning or add the provisions later. There's no notice required unless you have discretionary match that will satisfy ACP pass. No maybe notice required at all, that's baked in at this point.

Also, if you add Nonelective Safe Harbor to an existing plan within one month of the plan year end (e.g. 12/1/2021 or later for a 2021 calendar-year plan), the minimum SH contribution percentage for that year is 4% instead of 3%.

And according to our document provider, although Notices are technically no longer required for Nonelective SH, if you want to have the option to reduce or cease SH mid-year without a qualifying business hardship, Notices that include that language continue to need to be provided prior to each year.

Bill, thank you

Andrew, I agree with you

Thank you both

4 hours ago, AndrewZ said:

although Notices are technically no longer required for Nonelective SH, if you want to have the option to reduce or cease SH mid-year without a qualifying business hardship, Notices that include that language continue to need to be provided prior to each year

Am I missing something here? If no safe harbor has been elected yet for the plan year, there's no safe harbor to reduce or cease midyear. If 3% contributions have been made on a payroll basis without a SH notice and they stop mid-year, that's just a profit sharing contribution, which presumably satisfies the plan's profit sharing formula, or the formula can be amended to do so.

Ken

My scenario is where I would set up the SH as of 12/31/2020 effective 1/1/2021 with a may be notice and this is why I wanted to confirm that a SH notice had to be provided. So if they start the SH on 1/1/2021, the may be notice would allow all these contributions to be categorized as SH and if later they want to stop, they can do so. Am I correct on this assumption?

Thanks

On 11/5/2020 at 2:04 PM, Ken Marblestone said:

Am I missing something here? If no safe harbor has been elected yet for the plan year, there's no safe harbor to reduce or cease midyear. If 3% contributions have been made on a payroll basis without a SH notice and they stop mid-year, that's just a profit sharing contribution, which presumably satisfies the plan's profit sharing formula, or the formula can be amended to do so.

Correct - that only applies for a plan that already contains Nonelective SH provisions. The OP asked for confirmation that such Notices are no longer required (separate topic from adding SH to an existing plan), so I clarified that practitioners may still want to issue them to make it easier to reduce or suspend contributions (requiring 30-day advance notice to participants).