When can a safe harbor 401(k) plan be started?
Rev. 10/05/07, E-mail Alert 2007-13

Notice 2005-92

An existing 401(k) plan may not add safe harbor provisions until the beginning of a new plan year. For example, an existing calendar year 401(k) plan may not add safe harbor 401(k) provisions as of October 1, 2009 for the rest of the 2009 plan year. They could however, make plans to amend the 401(k) plan into a safe harbor plan effective January 1, 2010.

Keep in mind that there is an exception for a brand-new plan or for a profit sharing plan that is adding a 401(k) provision for the first time. In the case of a new plan, the employer may establish the plan as a safe harbor plan, provided there are at least three months of the plan year remaining after the plan is started. If the company is a new entity and will not exist for three months during that first plan year, a shorter period is applicable.