Ubiquity Retirement + Savings has been an affordable provider of retirement solutions, including Safe Harbor 401k plans, designed for small businesses, start-ups, and solopreneurs since 1999.
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Whether you have a Safe Harbor 401k already or are considering a new plan, it helps to know what’s new for 2020. While the primary Safe Harbor requirement is that you must make contributions to your employees’ 401k, there are also other 2020-specific rules regarding how and when you can offer your plan.
Ubiquity sets up brand new 401ks with the Safe Harbor provision. If it appears a business may fail this year’s nondiscrimination test, it is possible to terminate an existing plan completely and set up Safe Harbor contributions.
Here are the 2020 dates you need to know:
This year provides a new notice exemption for employers making nonelective contributions.
Given these changes, the Safe Harbor might be worth a closer look, as it can now be adopted retroactively in the event of ADP/ACP testing failures. Adopting the Safe Harbor can alleviate the failure, but will cost a 3-4% employer contribution.
A Qualified Automatic Contribution Arrangement (QACA) is a form of Safe Harbor 401k plan that includes automatic enrollment. QACAs have strict compliance rules.
A plan does not have to permit hardship withdrawals, but 2020 changes you may apply to your plan allow:
Many of these changes were enacted as a result of the SECURE Act of 2019. If you have any further questions, we invite you to contact us here at Ubiquity. We administer 401k plans of all types for a low, flat-fee.