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Suspending Safe Harbor Contributions During the Plan Year

If you have elected to have your retirement plan treated as a Safe Harbor Plan, you may have an option to suspend your contributions to that plan.


Recently, the IRS issued final regulations allowing the reduction and/or suspension of a company’s safe harbor contributions during the plan year if one of the following criteria is met:

  1. The plan sponsor is operating at a loss, or
  2. The plan’s safe harbor notice states that the plan may be amended during the year to reduce contributions, another notice will be given to participants if a reduction occurs and the reduction will not occur until 30 days after that notice is given.

The regulations apply to amendments reducing Safe Harbor nonelective contributions adopted after May 18, 2009 and to amendments reducing Safe Harbor matching contributions adopted after January 1, 2015. For more details on the specifics of these regulations, please visit our full benefits alert: IRS Final Regulations on Suspending Safe Harbor Contributions During the Plan Year.

 

Peter Alwardt is a Tax Partner specializing in employee benefits, tax and ERISA issues for domestic and international clients. He is a member of the American Institute of Certified Public Accountants and NY State Society of CPAs.

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