TEMPORARY Safe Harbor 401(k) Plan Mid-Year Amendment Relief

Executive Summary
 

Internal Revenue Service (“IRS”) Notice 2020-52 provides clarification that mid-year changes to reduce or suspend safe harbor 401(k) plan contributions to highly compensated employees (“HCEs”) is permissible provided the HCEs are given a supplemental safe harbor notice 30 days in advance and the HCEs have an opportunity to change their contributions.

In addition, employers may now reduce or suspend 401(k) safe harbor matching or nonelective contributions if the 401(k) plan is amended to reduce or suspend such contributions on or by August 31, 2020. Thirty day advance supplemental safe harbor notice of the mid-year change is not required for reductions or suspensions of nonelective contributions as long as it is provided to all eligible employees by August 31, 2020. However, the 30 day advance supplemental safe harbor notice of the mid-year change is required for reductions or suspensions of matching contributions, along with providing