For many years, the IRS has taken the position that a plan
sponsor may not make mid-year amendments to safe harbor 401(k)
plans. This was based on regulations requiring that, subject to
specific exceptions, the safe harbor provisions, once adopted, must
remain in effect for an entire 12-month plan year.
Most practitioners had interpreted this regulation to prevent
mid-year changes to the safe harbor contribution election itself
and, perhaps, to those plan provisions described in the annual safe
harbor notice, including eligibility requirements, entry dates and
vesting. The IRS, on the other hand, had taken the position that
the regulations prevent any mid-year change to the plan
unless specific exception has been granted by regulation or other
formal pronouncement, precluding any change to the plan once the
plan year has commenced. The concern, of course, has been that a
mid-year amendment could cause loss of safe harbor status,
