Safe Harbor Notice: What To Know

By Anthony L. Scialabba IV, Esq., QKA

 

What is a safe harbor notice?

 

A safe harbor notice informs the eligible employees of a plan of their obligations and rights under the plan. The safe harbor notice must contain at least the following information:

 

• The time frames under the plan to make elections of salary deferrals
• How to acquire additional details about the plan
• The plan to which the safe harbor contributions are made (if there is more than one plan)
• If the employer will make non-elective or employer matching contributions
• The vesting and withdrawal provisions for plan contributions
• How to make elections of salary deferrals
• The amount and type of compensation that may be deferred under the plan
• Other contributions under the provisions of the plan

 

What types of plans must serve a safe harbor notice?

 

All plans with a safe harbor feature must supply a safe harbor notice, unless the plan offers a safe harbor non-elective contribution and provides for no employer matching contribution.

 

When and to whom must a safe harbor notice be distributed?

 

A plan’s safe harbor notice must be distributed by: (1) at least 30 days (and no more than 90 days) before the start of each plan year or (2) in the year an employee becomes eligible, generally no earlier than 90 days before the employee becomes eligible and no later than the eligibility date. For example, if the plan year of a plan is on a calendar year basis, the safe harbor notice must be distributed by December 1st (but not before October 1st).

 

What if the safe harbor notice is not distributed?

 

A failure to provide a safe harbor notice constitutes a failure to operate the plan in accordance with its safe harbor provisions. If an employee was otherwise notified of the method for making elections of salary deferrals and of the features of the plan, the failure to give a safe harbor notice may be deemed an administrative error that would be resolved by updating procedures to make certain that future safe harbor notices are timely supplied. If a lack of a safe harbor notice leads an employee to not being able to make an election of salary deferrals to the plan, then the employer potentially must make a corrective contribution to the employee.

 

At RetireWell Administrators, Inc., we can prepare the safe harbor notice for your plan. If you have any questions or comments with regard to the safe harbor notice requirement, please call 856-396-0499 or email clientservices@retirewelltpa.com.