Safe Harbor Plans: is it Safe to Amend?

If you have a safe harbor plan and wanted to make a change during the year, the IRS restricted what you could and could not amend, even if the change didn’t affect the safe harbor provisions.

Recently, the IRS issued additional guidance for both traditional and qualified automatic contribution arrangements (QACA) safe harbor plans, allowing for most type of mid-year changes, as long as certain requirements are met.

If the change does not affect either the safe harbor provisions or the notice requirement, no other special procedures are required.  Amendments which do not affect the content of the safe harbor notice do not require an updated safe harbor notice and does not cause the plan to lose its safe harbor status.

Participants must receive an updated safe harbor notice (30-90 days before the change) if it affects either a plan’s safe harbor provisions, or the information required to be included in the safe harbor notice.  Participants must also be provided a reasonable opportunity (30 days) to change contribution elections.

Table SH

This new guidance is a welcome relief for safe harbor plan sponsors, allowing more flexibility in plan design if the need arises during the plan year.

Comments are closed.