Believe it or not, it's time to start planning for 2013. A little early, you say? Well, not if you sponsor a safe harbor 401(k) plan or are thinking of adding a safe harbor feature to your existing plan.
IRS rules limit changes to safe harbor plans to the beginning of a plan year. Although there are a couple of narrow exceptions, this means that existing safe harbor plans must adopt any changes this year to make them effective for January 1st or wait another whole year until 2014. Plans that wish to add a safe harbor feature must also do so at the beginning of a year.
Why are we mentioning this in October?
The reason is that safe harbor plans must provide a detailed notice to participants no later than December 1, 2012, describing plan provisions for the coming year. That means we have to start the conversation now to ensure there is adequate time to work through the process and timely prepare any necessary documentation.
What do you need to do?
If you fall into one of the following two categories, please contact your consultant as soon as possible:
- You currently sponsor a safe harbor 401(k) plan and are considering any changes.
- You are interested in adding a safe harbor feature to your existing 401(k) plan.
We can discuss the proposed changes with you to help you understand the pros and cons as well as any alternatives that may help you meet your objectives.
What is your deadline?
In order to guarantee preparation of the necessary documentation including the participant safe harbor notice for distribution by December 1st, we must receive your confirmed/approved amendment request no later than Friday, November 9, 2012.
What if you aren't sure if you want to make any changes?
Call us to let us know what you are considering, and we will help you with the cost/benefit analysis to assess the impact those changes can have on your business.
What if you don't have a safe harbor plan and don't want one?
This e-mail is focused on safe harbor plans because of the shorter amendment deadline they face. However, we are always available to discuss potential plan amendments with you no matter what type of plan you have.
November 9th will be here before you know it, so please call or e-mail us as soon as possible to discuss any changes you are considering for the coming year.
|