![]() However, Rainbow failed to provide the safe harbor notice to its employees for the 2018 plan year. Eligible employees received timely notices in 20. The appropriate correction of this failure depends on the impact on individual participants.Įxample: Rainbow Company’s safe harbor 401(k) plan makes matching contributions of 100% of elective contributions up to 3% of the employee’s compensation plus 50% of elective contributions greater than 3%, but not more than 5% of the employee’s compensation. The plan sponsor cannot “opt out” of safe harbor plan status for the year simply by performing the ADP/ACP tests for the year of the failure. The plan has an operational failure because it failed to operate in accordance with the terms of the plan document. The failure to provide a safe harbor notice is a failure to operate the plan in accordance with its safe harbor provisions. ![]()
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