Typo (of Year) in the Safe Harbor Notice

Scenario: The safe harbor notice went out at the correct time prior to 2017 (November 2016). The information in the safe harbor notice was correct within the notice EXCEPT the notice was to apply to 2017, but the notice stated that it "applies to the plan year beginning 1/1/2016." 

In all other ways, other than the Plan Year identification, the information was correct.

The questions are:

1) Can this be considered a typo/mistake of fact so that 2017 can be tested as a safe harbor plan?

2) Should this be self-corrected by providing all the participants who should have received the notice stating for plan year beginning 1/1/2017 with a corrective employer contribution? Most of the employees are already making elective deferrals.

Thank you,

Assume it is a safe harbor match as you included elective deferrals at the end. Given that nothing changed from 2016 to 2017 and a notice was issued with the wrong year, that issuing another one mid-year (assuming calendar year plan) just to change the plan year is more confusing to participants because it appears you are making a mid-year change to the plan.  You may consider revising the year and sending to the employer for their file in case it is needed in the future and making note in your records. 

Thank you Madison71.

Because the participants received a notice in a timely manner, and the information other than the year was correct, you don't think any further correction is necessary?

I was leaning that way, and appreciate your confirmation. Would you think this fits into the category of mistake of fact?

Good question.  I don't know - the IRS has not defined mistake of fact although typos have been found to generally be included in this category in PLRs.  If it came up in audit, I think you could argue this or that it was an administrative error when preparing the forms to not change the date and that the notice was sent out and most are deferring.  If you can also show that each participant was made aware of the match and ability to defer (education/enrollment meetings), no one was harmed and that procedures were tightened up to ensure this didn't happen again, then I think you should be ok.

PS - you're more than welcome

Thank you very much. Your help really is greatly appreciated.

FWIW, we eliminated reference to the specific YEAR in our SH notice way back when.....

We use the same SH notice every year (specific to each client but no changes from year to year).

Makes life much easier.

Excellent course of action!  Never thought of that.  Thanks for the info. 

Hi Larry - so what does it say - for example, "This notice is for the Plan Year that begins following your receipt of this Notice" or something generic like that?

What kind of correction could there be?  2017 concluded almost 7 months ago.

While it's not official guidance, the IRS has information on their website dealing with corrections for late safe harbor notices.  The notice in the OP wasn't late, but I think the listed correction for a late notice with participants still informed of plan features and allowed to defer would also be applicable here. Revise plan procedures to try to prevent it from happening in the future. 

https://www.irs.gov/retirement-plans/fixing-common-plan-mistakes-failure-to-provide-a-safe-harbor-401k-plan-notice

Fixing the mistake

The appropriate correction for a late safe harbor 401(k) notice depends on the impact on individual participants. For example, if the missing notice results in an employee not being able to make elective deferrals to the plan (either because he was not informed about the plan, or informed about how to make deferrals to the plan), then the employer may need to make a corrective contribution that is similar to what might be required to correct an erroneous exclusion of an eligible employee.

On the other hand, if an employee was otherwise informed of the plan’s features and the method for making elective deferrals, the failure to provide notice may be treated as an administrative error that would be corrected by revising procedures to ensure that future notices are provided to employees in a timely manner.

Example: In the facts above, Rainbow must evaluate the impact of not providing its eligible employees a safe harbor notice. The correction might be different for each affected employee. As illustrated in this example, the failure to provide notice could require treating the individual as an excluded eligible employee or simply revising an administrative procedure for an existing participant.