Safe Harbor Notice Requirements

I know the SECURE Act removed the requirement for Safe Harbor notices for non-elective Safe Harbor contributions.  I just wanted to make sure that it applies to both the 3% Safe Harbor and the basic Safe Harbor Match? 

Thanks in advance!

No.

Any SH Match (basic, enhanced, basic QACA, enhanced QACA) MUST get the notice.

At least that is my understanding of the rules and the chart I got from the FIS seminar we did in September.

1 hour ago, BG5150 said:

Any SH Match (basic, enhanced, basic QACA, enhanced QACA) MUST get the notice.

Correct. The only reason notices were eliminated for the SHNE is because employees did not need to do anything to receive those contributions, and the powers that be finally came to their senses after years of having to notify participants that they were getting 3% in the coming year (again) whether they contributed or not. Since matching contributions require employee deferrals, annual notices make sense - otherwise, how many doctor/owner plans would you see where "strangely" it was only the doctor with deferrals and safe harbor match?

Why remind everyone about the match every year if you do not have to do it for the NEC?

The notice requirement was eliminated solely for the 3% (or 4%) safe harbor non-elective contribution, and solely for purposes of the ADP safe harbor. If you want to use a non-elective contribution to qualify for the ACP safe harbor - for example, you want to make a discretionary match that is not subject to the ACP test - then you still need the notice.

Also, don't you need the 3% SHNE notice anyway if you want to have the ability to stop it in the middle of the year (and be subject to ADP testing)?

On 11/15/2021 at 2:06 PM, BG5150 said:

Why remind everyone about the match every year if you do not have to do it for the NEC?

So that employees are able to make a fully-informed decision about deferring for the upcoming year based on the match.

22 hours ago, Gadgetfreak said:

Also, don't you need the 3% SHNE notice anyway if you want to have the ability to stop it in the middle of the year (and be subject to ADP testing)?

Yes. For this reason, we continue to issue safe harbor notices for all of our clients, whether they are making safe harbor nonelective or matching contributions.

Just now, EBP said:

So that employees are able to make a fully-informed decision about deferring for the upcoming year based on the match.

I would think that the nonelective contribution would factor into a "fully-informed decision," too.

Are you saying people will remember that 3% but would forget about the match?

I believe that the 3% flexible safe harbor plan design also requires an annual notice.

Another example of trying to simply something by making it more confusing.

I am assuming jsample means a “may be” notice which in this case notice is required, as far as I know.

On 11/16/2021 at 4:21 PM, BG5150 said:

On 11/16/2021 at 4:18 PM, EBP said:

So that employees are able to make a fully-informed decision about deferring for the upcoming year based on the match.

I would think that the nonelective contribution would factor into a "fully-informed decision," too.

Are you saying people will remember that 3% but would forget about the match?

No. The participant doesn't need to do anything to get a nonelective contribution. He does have to defer a certain amount to get the match. If the participant doesn't know what the match is ahead of time, he may not elect to defer enough to get the full match. Knowing what he has to defer to get the full match may influence his deferral decision.

46 minutes ago, EBP said:

No. The participant doesn't need to do anything to get a nonelective contribution. He does have to defer a certain amount to get the match. If the participant doesn't know what the match is ahead of time, he may not elect to defer enough to get the full match. Knowing what he has to defer to get the full match may influence his deferral decision.

Why do you have to remind the participant EVERY YEAR? Are they going to forget there is a match?

And for most people, I would think, just the 3% employer contribution isn't much in the way of retirement planning.

The way (I think) it should be done is that you look at what your desired income after retirement should look like.  Then you see what percentage of your pay should be put aside each year to get to that number. Then you figure out how much of your pay to defer in combination with anticipated employer contributions.

For example, if I think 7% of my compensation will be enough to fund my retirement, then, with only a 3% NEC, I would need to defer 4%.  If there is a dollar-for-dollar match up to 4%, the I will defer 3.5%.  If no employer contributions at all, then 7%.

As long as the Participant has access to the information on employer contributions (NEC or Match), then why MUST you go out of your way to tell them about ONLY the match EVERY year?

That said, why not have to send a notice out each year for ALL kinds of matches, not just the safe harbor?  I think it would be more important ro remind people there is an hours requirement and/or last day requirement for a match.  It may keep someone on the job through December.  How cruel is it to deny someone a match if they leave the company on December 20?  Might they stay if they knew?

Check the SPD you say?  Them check it for the safe harbor match then, too.

We take EBP's approach - we just send them for all clients. Otherwise too easy to miss notices in a situation that requires them, and this way we don't have to think about it! Participants are "noticed" and "disclosured" to death already with stuff they don't read - what's one more thing to recycle, right?