IRS Seeking Comments on Business Hardship Rules for Safe Harbor Defined Contribution Plans

Franczek P.C.
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The IRS is seeking comments on rules that permit sponsors of 401(k) plans to reduce or suspend safe harbor contributions in the middle of the plan year. As we wrote in a previous alert, under rules issued in November of 2013, such midyear changes to safe harbor non-elective or matching contributions are permitted if: (1) the employer is operating at an economic loss; or (2) the employer provides notice to participants before the start of the plan year that such contributions may be reduced or suspended during that upcoming plan year and provides a supplemental notice to participants at least 30 days before making such midyear contribution changes. The IRS is accepting comments until September 15, 2014.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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