401(k) Safe Harbor Notice and Loans

[AJ North]

A plan with an existing 401(k) safe harbor wishes to add a loan provision mid plan year. Does adding the loan provision have an impact on the withdrawal section of the required 401(k) safe harbor notice? If the safe harbor contributions are subject to being "withdrawn" as part of a loan, my guess here is yes. The plan would need to wait until the beginning of the next plan year to add a loan provision. Does this make sense? Or does adding a loan provision not affect the safe harbor notice? your thoughts are appreciated.

[ETA Consulting LLC]

A loan is not a withdrawal, but a plan asset. All you are doing is trading one asset (cash) for another asset (a receivable).

Good Luck!

[Tom Poje]

ugh. logically you would think it shouldn't make a difference, but the IRS seems to be pretty strict about modifying things. you would think a deferral is a deferral, but even addinga Roth feature is one of only 2 things you could change, so I would be hesitant about adding a loan mid year. I know on our safe harbor notices, that is one of the items that is described, and changing that would be something not in the original notice.