IRS auditors have been asking employers to provide evidence that they provided the safe harbor 401(k) notice to participants as required, the folks at Relius Sungard have learned. This evidence would include a copy of the notice. If a plan is unable to provide such evidence, the IRS is requiring the plan to correct the oversight and, in some circumstances, pay a closing agreement sanction as well.
Now that the IRS is enforcing the notice requirement more strictly, Sungard notes, plan sponsors need to be more vigilant in maintaining documentation that they provided the notice and correcting any failures. A copy of the notice with a date and some form of cover letter probably would be sufficient. For electronically provided notices, the evidence should include a dated copy of the email that was sent, along with a list of distributees. Read more — including some Q&As and a helpful example — here.
