Retroactive Safe Harbor for 2020, plan was already a 3% Safe Harbor

Suppose a plan had 3% safe harbor nonelective provisions in place for the plan year ending 12-31-2020 and it was a brand new 401(k) plan. Deferrals were allowed right away upon hire, but to be eligible for the 3% safe harbor nonelective, a year of service was required. Assume they only have deferrals and safe harbor in the plan for 2020. Also, they excluded the non-key HCEs from the safe harbor (a lot of people).

Also suppose they are now "enjoying" the top-heavy surprise since not enough non-key employees deferred in 2020 to keep the plan out of top-heavy status (not even close, even with the eligible NHCEs all getting 3%).

Based on the language under IRC 401(k)(12) after its changes for the SECURE Act, do you believe they could amend the plan now to adopt a 4% safe harbor nonelective for 2020, making it's eligibility the same as the deferral eligibility, thus making the plan exempt from top-heavy for 2020?

Here are the relevant code sections for this question:

401(k)(12)(C) Nonelective contributions - The requirements of this subparagraph are met if, under the arrangement, the employer is required, without regard to whether the employee makes an elective contribution or employee contribution, to make a contribution to a defined contribution plan on behalf of each employee who is not a highly compensated employee and who is eligible to participate in the arrangement in an amount equal to at least 3 percent of the employee’s compensation.

401(k)(12)(F) Timing of plan amendment for employer making nonelective contributions

(i) In general Except as provided in clause (ii), a plan may be amended after the beginning of a plan year to provide that the requirements of subparagraph (C) shall apply to the arrangement for the plan year, but only if the amendment is adopted—

     (I) at any time before the 30th day before the close of the plan year, or  (II) at any time before the last day under paragraph (8)(A) for distributing excess contributions for the plan year.

(ii) Exception where plan provided for matching contributions - Clause (i) shall not apply to any plan year if the plan provided at any time during the plan year that the requirements of subparagraph (B) or paragraph (13)(D)(i)(I) applied to the plan year.

(iii) 4-percent contribution requirement - Clause (i)(II) shall not apply to an arrangement unless the amount of the contributions described in subparagraph (C) which the employer is required to make under the arrangement for the plan year with respect to any employee is an amount equal to at least 4 percent of the employee’s compensation.

I don't see why not. It sounds reasonable to me and I don't read anything in the law that would prohibit it. But wouldn't it be cheaper just to pay the top heavy minimum?

That was my thought too. But the non-key HCEs are excluded from the safe harbor, so the 4% is a much cheaper deal in this case, I presume.