Hey Everyone,

I just wanted to check to see if I understand something correctly. If an employer does not have an existing 401K plan and wants to set up a Safe Harbor 401K with an effective date of 1-01-2010 what is the latest the plan can be set up?

As long as it is a NEW 401K would be alright to have everything set up and plan docs signed by 12-31-09? Since the SH notice timing rule for a new plan would be the same as the timing rule for a newly eligible employee wouldn't we have until the date the participants would be eligible to participate which would be the effective date of the plan, 1-01-2010, to give out the Safe Harbor notice?

Thanks for your help!

You are correct. The notice can be provided as late as 1/1/10 for employees who are eligible on that date. I believe the reg is 1.401(k)-3(d)(3)(ii).

Scott

Actually, you can set up a new plan for 2010 as late as October 1, 2010, but then they can't start deferring until October 1, 2010.

If the business is new in the last few months of 2010, you could even set up a SH plan later than October 1.

Thanks for the responses!