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ARTICLE · 04 NOVEMBER 2020

IRS Relaxes Some Requirements For Midyear Changes To Safe Harbor Plans

Kilpatrick Townsend & Stockton LLP
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Qualified 401(k) and 403(b) retirement plans that are designed with certain minimum matching or nonelective contribution formulas are deemed to pass annual ADP and ACP nondiscrimination

United StatesEmployment and HR
Todd B. Castleton
Todd B. Castleton
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Qualified 401(k) and 403(b) retirement plans that are designed with certain minimum matching or nonelective contribution formulas are deemed to pass annual ADP and ACP nondiscrimination testing requirements applicable to those plans. These "safe harbor plans" generally must have the contribution structures adopted before the plan year begins and be maintained in place for an entire plan year to receive the annual testing waiver. However, in some circumstances, usually requiring advance notice, safe harbor plans may be amended midyear to change certain aspects of the plan, including the matching or nonelective contribution formulas.

 Current IRS regulations allow safe harbor plans to be amended midyear to reduce or eliminate the safe harbor contributions under the following conditions:

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