I read Notice 2000-3 as providing that an existing non-401(k) defined contribution can convert to a safe harbor 401(k) as late as October 1. I do not read anything that permits an existing 401(k) plan to convert to a safe harbor arrangement mid plan year. Am I correct?

Yes. Except for the one-time notice extension rule for 2000 (May 1st, I believe) (and even then, the safe harbor provisions need to be adopted retroactively back to 1.1.00), existing 401(k) plans cannot adopt safe harbor provisions mid-year.

I need clarification. You mean until May 1, 2000, I can convert an existing 401(k) plan to a safe harbor plan as long as the safe harbor provisions are retroactive ti 1-1-00?

A-9 of IRS Notice 2000-3 (2000-4 I.R.B. 413) provides that a plan can adopt a safe harbor formula for the first time with respect to a plan year that begins on or after January 1,2000 and on or before June 1, 2000 if the notice is given on or before May 1, 2000. It clearly states that this transition relief applies whether the safe harbor forumla is adopted under a newly established 401(k) plan or under a preexisting 401(k) plan. To use this rule, the plan must meet the safe harbor requirements for the entire plan year.

Thornton,

I started another thread "Another Safe Harbor Question" that I feel answered the question.

Just don't believe Alf when he/she says "clearly" states.... ;-}

"This transition relief applies whether the 401(k) safe harbor method is adopted under a newly established 401(k) plan or under a preexisting 401(k) plan."

Notice 00-3

Q&A-9

first paragraph

fourth sentence!

Is there any relief for an Employer who adopts a 401(k) Plan after May 1,2000 effective back to 1/1/00 who would like to use the 3% non-elective safe harbor contribution?

What if it's a profit sharing plan adding a safe harbor 401(k) feature? Are the requirements just that the 401(k) feature be added by Oct. 1 (for a calendar year plan) and notice given to employees presumably 30 days before effective date of 401(k) amendment?

Hoard1 - I don't think you can retroactively adopt a 401k plan, i.e., deferrals shouldn't be made unless the doc has been executed and made "official". Why not make the plan effective currently, even if it means having a short PY?

Existing 401(k) Plan with a 10/01-09/30 plan year. Wants to convert to safe-harbor (getting killed on ADP test). Am I correct in my understanding that this plan cannot add safe-harbor provisions until the plan year beginning 10/01/2000 (i.e., may not be amended for the current 10/01/99-09/30/00 plan year)?

SMB,
I belive your assumption is correct. Safe harbor effective 10/01/00. what about putting in a 3% QNEC for p/y ending 9/30/00. Would this help? Costs the same. Anyone have other ideas?