Day of the Dead…lines: Updating Your Plan’s Safe Harbor Notice

As the end of year approaches, now is the time for safe harbor 401(k) plan sponsors to prepare their annual safe harbor notices.

401(k) Plans that satisfy nondiscrimination testing via the employer contribution safe harbors in Internal Revenue Code §§ 401(k)(12) and (13) are required to send notices to participants within a reasonable time prior to the start of the plan year. Per IRS regulations, the timing is deemed reasonable if the notice is provided at least 30 days (and no more than 90 days) prior to the start of the plan year (so, by December 1 for calendar-year plans).

Revising a Prior Year’s Safe Harbor Notice

For a plan sponsor that has previously sent out the safe harbor notice, last year’s notice should be updated for any changes. This may include updating the date of the notice, annual contribution limits (when published by the IRS), any deferral changes, any employer contribution changes (including vesting schedules), and any distribution changes (perhaps implementation of the qualified birth or adoption distribution option).

Additionally, if the prior year’s safe harbor notice did not contain a statement that the employer may reduce or suspend contributions midyear, plan sponsors should consider adding that language to the safe harbor notice. The statement must note that the any reduction or suspension will not become effective until at least 30 days after participants have received notice of such reduction or suspension.

New Safe Harbor Notices

For 401(k) plans implementing the safe harbor employer contributions for the first time in 2022, the notice needs to contain all the information required by Treasury Regulation §§ 1.401(k) through 3(d)(2). Plan sponsors should also consider adding the midyear change or suspension language noted above.

Your Faegre Drinker benefits attorneys are ready to help prepare or review safe harbor notices, so please reach out to your Faegre Drinker benefits attorney contact for assistance.

The material contained in this communication is informational, general in nature and does not constitute legal advice. The material contained in this communication should not be relied upon or used without consulting a lawyer to consider your specific circumstances. This communication was published on the date specified and may not include any changes in the topics, laws, rules or regulations covered. Receipt of this communication does not establish an attorney-client relationship. In some jurisdictions, this communication may be considered attorney advertising.

About Author: Summer Conley

Summer Conley is leader of the firm's benefits and executive compensation group. She guides companies through the complicated legal landscape surrounding employee benefits. She advises on qualified plan, health and welfare and executive compensation issues. View all posts by and

About Author: Mark Rosenfeld

An employee benefits lawyer, Mark Rosenfeld counsels employers, plan sponsors and administrators on the design, administration and governance of retirement plans (such as 401(k) plans) and welfare plans (such as health plans). He also drafts executive compensation arrangements, equity incentive plans and severance plans. Mark provides detailed analysis and advice on IRS Code § 280G golden parachute provisions in M&A transactions. View all posts by and

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