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SECURE Act 401(k) Safe Harbor Q&As

The SECURE Act eliminated the safe harbor notice requirement for nonelective contributions, but it maintained the requirement to allow employees to make or change an election at least once per year. 

The bill also permits plan sponsors to switch to a safe harbor 401(k) plan with nonelective contributions at any time before the 30th day before the close of the plan year. Amendments after that time would be allowed if the amendment provides: (1) a nonelective contribution of at least 4% of compensation (rather than at least 3%) for all eligible employees for that plan year, and (2) the plan is amended no later than the last day for distributing excess contributions for the plan year, that is, by the close of following plan year.


Q1: If a non-elective safe harbor plan has a discretionary match provision, is there still a notice requirement? Or are there no longer any requirements for all nonelective safe harbor plans?

A1: Non-elective safe harbor plans must provide a notice if they intend to satisfy the ACP safe harbor. We will need guidance from the IRS on this issue, but in the interim, it is safest to still provide the notice.

Q2: What about an existing 401(k) plan that is operating with a safe harbor “Maybe” non-elective 3%. Is a 2021 notice still required by Dec. 1, 2020?     

A2: No, unless you are using the ACP test in the safe harbor plan or you have an EACA.

Q3: To use the safe harbor 4% option to cure a test failure, wouldn’t the provision already need to be in the plan document or is this open to plans that don’t already have it written in?

A3: This is for plans that don’t have it written in. You’re amending the plan to add it.

Q4: For safe harbor non-elective plans, there is no longer an annual notice requirement. Is there an initial notice requirement, other than the updated SPD?

A4: No.

Q5: SHNEC notice—am I correct in saying that starting with plan years beginning Jan. 1, 2020, no SHNEC notice is needed, so if I missed it, there is no problem? 

A5: Correct. If you missed providing the notice for 2020, then no problem. This assumes the plan is not using the ACP safe harbor for any matching contributions.

Q6: Are new plans still only able to adopt safe harbor non-elective by October 1 or can brand new plans adopt by end of the year retroactive to plan effective date?

A6: Clarification from the IRS would help, but the statute doesn’t preclude using this for new plans. But, the requirement that the plan be in existence for at least three months probably still applies.

Q7: If all the safe harbor non-elective information in included in the SPD that is provided annually and to off-calendar years, can we eliminate the notice?

A7: If you aren’t using the ACP test safe harbor and the plan doesn’t include an EACA, then you are not required to provide an annual notice. It doesn’t matter whether you provide an SPD annually.

Q8: If you adopt an amendment for a non-elective safe harbor of 3% for the 2020 plan year in 2021, are you then locked in to giving the same in 2021? Effectively, can you flip-flop each year?

A8: Just as with current rules, there is nothing locking you into more than one year. You would want to ensure the amendment to add the safe harbor provides that it only applies to that one year.

Q9: If the plan is a safe harbor non-elective but the document has a provision that the client could give an additional match, would the option in the document for a discretionary match then require a safe harbor notice?          

A9: If they are using the ACP test safe harbor for that discretionary match then a safe harbor notice would still be required.

Q10: Do you think this provision makes safe harbor “Maybe” elections no longer necessary?

A10: Correct. The safe harbor “Maybe” notice is not needed.

Q11: The plan still has to be a 401(k) to elect safe harbor status, right?     

A11: Correct.


The topics addressed on this page are for information purposes only and should not be construed as specific tax or retirement plan advice. Individuals should consult a tax advisor or attorney for questions regarding specific tax or legal needs.