Safe Harbor Contribution 401(k) Plan Notice Requirements

Each eligible employee must receive notice of their rights and obligations under the plan each year, including:

• Which matching or nonelective* contribution formula was used in the plan.
• Which discretionary contributions are available and under which conditions they’re made.
• Which withdrawal and vesting provisions apply to the plan.
• Which plan contributions are made to (if different from the 401(k)).
• The type and amount of compensation that employees can defer.
• How to make deferral elections and what administrative requirements apply.
• Which election periods are available under the plan.
• Where to obtain additional information about the plan, such as the Summary Plan Description.

If the Safe Harbor is a QACA plan, sponsors must also provide notice of the level of elective contributions made in the absence of an affirmative election, the employee’s right to forego these contributions, and information regarding how the automatic contribution arrangement will be divided among investment options.

*It is not a federal requirement to provide an annual plan notice to participants in Safe Harbor plans designed with non-elective formulas, but Ubiquity policy.

Generally, new plans should be set up by August 15, plan documents signed and Safe Harbor notices delivered by October 1, and elective deferrals activated by the first pay date in October.

• Annual notices must be given within a “reasonable” amount of time – which means 30 to 90 days before the beginning of the new plan year.
• Sometimes employees become eligible after the 90th day before the beginning of a plan year–in which case, it is ideal to notify them of upcoming eligibility 90 days in advance; notice to new hires should be sent no later than the date of eligibility.
• In general, an updated notice is required if any changes are made to the Safe Harbor 401(k) Plan mid-year.
• Employees should be able to change their contribution rates within 30 days of receiving the updated notice.
• If the Safe Harbor contributions are to be suspended, employees must have no less than 30 days’ notice.

How to Provide Safe Harbor Notices

Annual Safe Harbor notices may be delivered in writing or electronically.

For plan years beginning January 1, 2020, there is no Safe Harbor notice requirement for nonelective plans, though it is still Ubiquity policy to provide these notices annually. Plan sponsors can now switch to a Safe Harbor 401(k) with 3% nonelective contributions at any time prior to the 30th day before the end of the plan year.

If the sponsor agrees to make a 4% nonelective contribution for the plan year, the amendment can be made any time prior to the last day of the following plan year.

Ubiquity is a 401(k) plan provider who serves as your best ally to stay on top of every IRS rule and regulation, including mandatory Safe Harbor notices. We take care of the day to day details of managing a 401(k) and consult with clients regularly to make sure the plan is to the benefit of all.

If you’re wondering how to set up a new Safe Harbor 401(k) plan, we’ll ensure it is set up in compliance with proper due dates. If you have an existing plan, you can add a Safe Harbor provision at any time.