Plans that have elected what is often referred to as “maybe” safe harbor nonelective contribution, permits a plan sponsor to choose if the safe harbor nonelective contribution will be made for the plan year. However, the plan is required to be amended timely, and the following requirements must be met:
- A contingent notice is required to be provided to each eligible employee no later than 30 days before the beginning of the plan year. Along with required notice content, the notice must specify that the plan may be amended during the plan year to include the safe harbor nonelective contribution, and if amended, a follow-up supplemental notice will be provided timely.
- Follow-up supplemental notice is required to be provided to each eligible employee no later than 30 days before the last day of the plan year. The notice must state that the safe harbor nonelective contribution will be made for the plan year.
What constitutes as a plan amendment?
The Consent and Notice of Contribution included in our follow-up supplemental notice are deemed to amend the plan for the nonelective safe harbor contribution for that particular year. An additional plan amendment is not needed to be signed by the end of the plan year. By executing the Consent and providing the Notice of Contribution, the plan sponsor satisfies the requirements above. The plan may continue to elect the safe harbor nonelective with follow-up notice for future plan years.
Please note: If the follow-up notice is not given for an applicable Plan Year, the Plan will not be subject to any of the conditions or limitations that apply to safe harbor contributions and the Plan will be subject to the nondiscrimination requirements of the plan document.