safe harbor notice

[cpc0506]

Client came to us today, December 3rd and asked to be safe harbor for next year. Currently are a 401k plan with match.

Client says December 1 fell on a Saturday, so we should be able to give a notice today, December 3rd and satisfy the notice requirement.

Any thoughts?

[Guest ghal]

From the ASPPA ASAP dated November 29, 2012 see the first page: "Deadlines with a single asterisk (*) fall on a weekend date which we do not recommend extending. For those weekend deadlines which can be extended under §7503, the revised date is reflected and is denoted with a double asterisk (**)." According to this, the safe harbor notice deadline does not fall under the category that can be extended due to the weekend.

Thanks

CPC, ERPA

[Tom Poje]

a notice is deemed to be issued within a 'reasonable' period if provided at least 30 days before the beginning of the year.

1.401(k)-3(d)(3)

Therefore, it is possible a notice could be issued later, you simply don't get the guarantee of 'yes, you did it soon enough'

if it's a 3% SHNCE it is less of a problem because one gets that whether one defers or not.

arguably, someone could approach the DOL and say "I wasn't given the notice timely to make an informed decision. I know I need to save for reiterement, but if I had known I was going to get 3% automatically, I would have stopped deferring and used my $ elsewhere"

[Kevin C]

The safe harbor notice must be provided a reasonable period of time before the beginning of the year. 30-90 days is deemed to be reasonable. Less than 30 days and it's a facts and circumstances determination. So, is today a reasonable period of time before the beginning of the year? It's a judgment call. I think you have a strong argument that sending the notice today is a reasonable period before the beginning of the year. But, as more days pass, it will be increasingly more difficult to argue it is reasonable.

1.401(k)-3)(d)(3)Timing requirement

(i)General rule.—

The timing requirement of this paragraph (d)(3) is satisfied if the notice is provided within a reasonable period before the beginning of the plan year (or, in the year an employee becomes eligible, within a reasonable period before the employee becomes eligible). The determination of whether a notice satisfies the timing requirement of this paragraph (d)(3) is based on all of the relevant facts and circumstances.

(ii)Deemed satisfaction of timing requirement.—

The timing requirement of this paragraph (d)(3) is deemed to be satisfied if at least 30 days (and no more than 90 days) before the beginning of each plan year, the notice is given to each eligible employee for the plan year. In the case of an employee who does not receive the notice within the period described in the previous sentence because the employee becomes eligible after the 90th day before the beginning of the plan year, the timing requirement is deemed to be satisfied if the notice is provided no more than 90 days before the employee becomes eligible (and no later than the date the employee becomes eligible). Thus, for example, the preceding sentence would apply in the case of any employee eligible for the first plan year under a newly established plan that provides for elective contributions, or would apply in the case of the first plan year in which an employee becomes eligible under an existing plan that provides for elective contributions. If it is not practicable for the notice to be provided on or before the date specified in the plan that an employee becomes eligible, the notice will nonetheless be treated as provided timely if it is provided as soon as practicable after that date and the employee is permitted to elect to defer from all types of compensation that may be deferred under the plan earned beginning on the date the employee becomes eligible.