2024 safe harbor notices

[Belgarath]

Suppose you take the approach that the 5,000 cash out limit will increase to 7,000 for 2024, unless the employer informs you otherwise.

Is there any dispensation on the timing of including this in the safe harbor notice? Or, realistically, issue an updated one once it is truly "known" as to whether or not, and exactly when, it is effective? I presume the latter...

[Peter Gulia]

Many third-party administrators and other service providers include in one’s service agreement a right to perform services following the employer/administrator’s instructions, including default instructions that result from the service recipient’s nonresponse to a default after a contract-specified notice period.

If that’s the contract parties’ deal, a service provider might prepare a disclosure so it follows the instructed in-operation provisions rather than those stated by a to-be-amended-later plan document.

While that way of doing things might not always be proper for a plan’s administrator, it might be fair between the service provider and its service recipient.

I have no thought on your particular question about a safe-harbor notice; I no longer know that rule.

[Bird]

21 hours ago, Belgarath said:

Suppose you take the approach that the 5,000 cash out limit will increase to 7,000 for 2024, unless the employer informs you otherwise.

Is there any dispensation on the timing of including this in the safe harbor notice? Or, realistically, issue an updated one once it is truly "known" as to whether or not, and exactly when, it is effective? I presume the latter...

A. Does that really have to be in the SH notice? I don't think so...can't say I'm looking at the latest regs, but my recollection is that you can reference the SPD for such stuff, and that's what FTW does in their SH notice.

B. If you are including it, I think you have to put blinders on and pretend you don't know about the pending increase. Or, just put it in. Either way, I don't think anyone is going to pore over a SH notice and compare it to...whatever, actual plan operation and/or documents given at the time of distribution.

[Belgarath]

Hi Bird - thanks for the response. I had thought of that, but 1.401(k)-3(d)(2)(iii) doesn't list this as one of the items that can be cross-referenced in the SPD.

We discussed this issue in staff yesterday afternoon, and sort of a "benign neglect" stance seemed reasonable. In many cases, we won't know in time to do the normal safe harbor notice anyway. I agree, the "risk" seems minimal, particularly since the employees will be notified via a SMM when an amendment is adopted, and will be notified semi-formally before that.

A lot of angst over something which to my mind is relatively insignificant...

[Bird]

2 hours ago, Belgarath said:

1.401(k)-3(d)(2)(iii) doesn't list this as one of the items that can be cross-referenced in the SPD.

You are correct; it's not cross-referenceable.

But, even back when we created our own notices, I did not even think about forceouts having to be in the notice. And if FTW doesn't include them, that's enough cover for me. I always thought of (G) (below) as describing when they could get money from the plan. We all have bright, or fuzzy, lines of ridiculousness and this is on the ridiculous side for me. (Not saying you are ridiculous, but if someone from the government tried to make a case about this...)

(G) Withdrawal and vesting provisions applicable to contributions under the plan;

[Belgarath]

Thanks Bird. The FIS "standard" notice does include this, but I agree with you that this crosses over the ridiculous line. We're updating our notices, but also not losing any sleep if we miss any.

[Bird]

5 hours ago, Belgarath said:

The FIS "standard" notice does include this

Jeez. That's surprising...but maybe not. When things are computerized, it's easy to just pile on anything and everything - when in doubt, throw it...in.