On June 29, 2020, the Internal Revenue Service (the “IRS”) issued Notice 2020-52 that provides temporarily relief to plan sponsors that amend their safe harbor Section 401(k) or 401(m) plans (“Safe Harbor Plans”) mid-year to reduce or suspend employer safe harbor...
Do you or your clients have a 401(k) plan that could benefit from amending to include a safe harbor provision?
The IRS requires Plan Sponsors to adhere to specific safe harbor hardship withdrawal guidelines for the distribution to take place.
There are several types of safe harbor contributions for defined contribution plans. Here is a breakdown of each of the types available.
Your retirement plan was recently restated for the Pension Protection Act (PPA). Within the PPA restatement, IRS mandated that forfeitures could no longer be used to reduce safe harbor contributions (i.e. basic safe harbor match, enhanced match or 3% nonelective). On...
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...
Roughly 90% of companies with an employee stock ownership plan (ESOP) either sponsor a separate 401(k) plan or combine ESOP and 401(k) components together under a single KSOP plan. An ESOP can be used as the vehicle for receiving the employer’s matching contributions...
The typical Employee Stock Ownership Plan (ESOP) is designed to reward those who stay with the company, providing an annual allocation of contributions. The typical 401(k) plan is designed to encourage employees to make salary deferral contributions. ...
Owners and highly compensated employees who are eligible participants in a safe harbor 401(k) plan are typically allowed to receive an employer contribution using the same safe harbor formula that is applied to the rank-and-file plan participants. However, some plans...
Employers with qualified 401(k) plans that fail nondiscrimination testing each year may find that a plan amendment to add a safe harbor contribution is an effective solution. A safe harbor provision requires a mandatory employer contribution, 100% immediate vesting of...