Friday, November 29, 2013
On November 14, the IRS released its final safe harbor rules, which allow companies operating at a loss to eliminate or reduce non-elective contributions made to Safe Harbor 401(k) plans midyear.
Popular among small business owners, the Safe Harbor 401(k) allows them and their employees “to make the maximum contribution either tax-deferred or after tax to their Roth 401(k) regardless of income.”
Employers in the past had to have a business hardship to suspend or reduce the non-elective contributions to their plans. But now, employers can do this no matter what their financial condition is as long as they let participants know at the beginning of the year that their plan contributions can be reduced or suspended midyear.
See Paula Aven Gladych, Safe Harbor Rules Issued for Non-Elective Contributions, BenefitsPro, Nov. 19, 2013.
Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.