SECURE ACT Non-elective contribution notice

[imchipbrown]

I saw this today in a SECURE Act review by Ballard Spahr LLP:

b. Nonelective 401(k) Safe Harbor Changes for Traditional and QACA Safe Harbors – The SECURE Act eliminates the notice requirement for safe harbor plans that make non-elective contributions to employees.

I can't put my finger on this in the text of the Secure Act text.  Can someone confirm this?

[Flyboyjohn]

See Section 103(a) of the Setting Every Community Up for Retirement Enhancement (SECURE) Act which is Division O of the Further Consolidated Appropriations Act 2020 (FCAA) attached entitled "Limitation of Annual Safe Harbor Notice to Matching Contribution Plans"

SECURE_Text.pdf

[Larry Starr]

On 12/24/2019 at 1:38 PM, imchipbrown said:

I saw this today in a SECURE Act review by Ballard Spahr LLP:

b. Nonelective 401(k) Safe Harbor Changes for Traditional and QACA Safe Harbors – The SECURE Act eliminates the notice requirement for safe harbor plans that make non-elective contributions to employees.

I can't put my finger on this in the text of the Secure Act text.  Can someone confirm this?

Having been involved with shepherding this piece of legislation (I am on ASPPAs Govt Affairs Committee as Senior Advisor), I assure you that provision is correct. No more safe harbor notices for the 3% non-elective.

Here's a note I sent to my staff last week:

Just a couple of pertinent new rules that will apply starting next year:

SECURE also makes a number of changes to the 401(k) plan rules, effective for plan years beginning after December 31, 2019. They include:

• The annual safe harbor notice would no longer be required for plans using the non-elective contribution approach.
• Traditional 401(k) plans can now be amended mid-year to become a non-elective contribution type safe harbor plan. (This option is not available for matching contribution safe harbor plans.) If the mid-year amendment is adopted fewer than 31 days before the end of the plan year, the non-elective safe harbor contribution must equal at least 4% of compensation and the actual amendment must be adopted no later than the end of the next plan year.

 

And of course, this is the BIG ONE:

Permit a new plan to be treated as effective for the prior tax year if adopted no later than the due date of the prior year’s tax return (effective for tax years beginning after December 31, 2019);  

 

I believe you will find it in Section 103a of the act.

[imchipbrown]

Thanks Flyboyjohn and Larry

Larry, I hope you didn't shepherd in the increase in fines for late-filing!  Ouchy ouch ouch.  If I don't have an ulcer, I'll probably get one now ?

Lot's of good stuff in this Act!

[Larry Starr]

2 hours ago, imchipbrown said:

Thanks Flyboyjohn and Larry

Larry, I hope you didn't shepherd in the increase in fines for late-filing!  Ouchy ouch ouch.  If I don't have an ulcer, I'll probably get one now ?

Lot's of good stuff in this Act!

They figured out what "penalties" they wanted all by themselves; we also didn't champion the elimination of the stretch IRA, even though I suggested many years ago that Congress would eventually eliminate it and with on grandfathering.