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We recently discussed Reducing or Eliminating Safe Harbor Matching Contributions during the plan year. Mid-year Safe Harbor 401(k) Plan Changes contains 10 FAQs on how an employer can eliminate or freeze safe harbor matching contributions mid-year and how to use the "maybe" notice approach to have more flexibility with nonelective safe harbor contributions:

  1. May an employer freeze a safe harbor 401(k) plan mid-year or, in the alternative, amend it into a traditional 401(k) plan mid-year?
  2. What are the necessary steps to freeze or amend mid-year a safe harbor 401(k) plan which provides the safe harbor matching contribution?
  3. May a safe harbor 401(k) plan with a safe harbor matching contribution formula and an additional matching contribution formula (discretionary or fixed) that is intended to qualify under the ACP safe harbor (ACP safe harbor match) eliminate or amend the ACP safe harbor match? May a safe harbor 401(k) plan eliminate or amend the ACP safe harbor match and not the safe harbor matching contribution formula that enables the plan to satisfy the ADP test safe harbor?
  4. For an employer that wishes to retain flexibility over the safe harbor nonelective contribution, what plan design options are available?
  5. What steps must the employer follow to apply the "maybe" notice approach?
  6. May an employer apply the "maybe" notice for more than one plan year?
  7. May an employer terminate a safe harbor 401(k) plan mid-year?
  8. What steps must the employer follow to terminate a safe harbor 401(k) plan?
  9. May an employer terminate a safe harbor 401(k) plan and retain safe harbor status for the short plan year?
  10. What factors must an employer use to determine if it has incurred a substantial business hardship?

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