IRS points pointers for secure harbor retirement plans
The IRS has issued guidance on certain provisions of the SECURE Act that affect Safe Harbor Plans, including Safe Harbor 401 (k) Plans and certain 403 (b) Plans.
A Safe Harbor 401 (k) plan is similar to a traditional 401 (k) plan, but it is structured to avoid certain compliance tests. A Safe Harbor 401 (k) plan must, among other things, include employer contributions that are fully non-forfeitable when provided. These contributions can be employer matching contributions limited to employees who defer or employer contributions made on behalf of all eligible employees, regardless of whether or not they postpone election.
Notice 2020-86 provides guidance in Q&A format on Sections 102 and 103 of the SECURE Act. Section 102 increases the 10 percent limit for Safe Harbor auto-enrollment plans. Section 103 deletes certain Safe Harbor notification requirements for plans that provide for non-selective Safe Harbor contributions and adds new provisions for retrospective Safe Harbor acceptance for those plans.
The notice is intended to provide guidance as the Treasury Department and the IRS develop additional requirements for the SECURE Act.