Safe Harbor Deadlines
In order to be in compliance with all of the safe harbor regulations and to take advantage of the benefits provided by having a safe harbor 401(k) plan, you must provide all eligible employees a timely written notice describing their rights and obligations under a safe harbor plan. The deadline to establish a plan for this year, if you do not already have one in place, is October 1, 2013. (please note, this deadline is for plans which end 12/31/13.)
NOTIFY ALL ELIGIBLE EMPLOYEES
You must provide a Safe Harbor Notice to all eligible employees no later than 30 days prior to the beginning of your plan year. For current clients of TriStar Pension, you we will be preparing those notices and sending them to you to distribute in November. The notice must go to anyone who is eligible or will soon be eligible to participate in your plan, even if they are not participating. Also, please ensure that an executed Salary Deferral Agreement and Beneficiary Designation Form are kept on file in your office for each eligible employee even if they choose not to participate in the plan. Please require that all eligible employees return to you a signed form with their election either to participate or not. It is very important that you have written documentation that participation in the plan was offered to everyone who was eligible.
Catch Up Contributions
If a participant will reach the age of 50 (or an age older than 50) at any time during the 2013 plan year, they are eligible to defer an additional $5,500 out
of their compensation and into the plan. This is referred to as a catch-up contribution. The maximum salary deferral limit for 2013 has increased to
$17,500. Therefore, a participant that is 50+ can contribute the maximum amount of $23,000 by the end of the plan year.
Q: What if their 50th birthday fell on December 31, 2013?
A: They do not have to wait until their 50th birthday to begin deferring the
catch-up contribution provided they will meet the age requirement at some point during the plan year. The maximum salary deferral limit for 2013 has increased to $17,500. It is very important that you have written documentation that the participation plan was offered to everyone.
If you have any questions, please do not hesitate to contact our office either by phone or e-mail. We are happy to discuss this further and assist you in
understanding these requirements.