Safe Harbor 401(k) Errors and Corrections

While it is true that safe harbor 401(k) plans are free from the testing of deferrals and, in most cases, matching contributions, it is also true that there are potential pitfalls that may jeopardize the plan’s qualification status. Our session on Monday, Oct. 27 at the ASPPA Annual Conference will highlight common errors and suggested corrections of which practitioners need to be aware.

Plan documents and disclosures are two of the most common areas where errors occur and which are scrutinized under IRS audit. We will discuss what has to be included in the plan document and how to correct it if found to be insufficient. We also will review:

• the specific requirements of the annual notice, including the timing of distribution and content;
• the proper correction techniques that have been suggested or approved by the IRS when there has been a failure to satisfy the annual notice requirements;
• how to make a correction when a participant is not given the proper opportunity to make elective deferrals;
• the restrictive IRS position regarding mid-year amendments and possible corrections when it is violated; and
• when testing is required for some of the contributions. Yes — we said testing may be required under some circumstances. We will review these in detail.

Of course, prevention is the best medicine and by attending this session, practitioners will have a list of “watch outs”!

Robert M. Richter, J.D., LL.M., APM, is vice president for SunGard Relius’ wealth and retirement administration business and manages the consulting department for its retirement services record keeping operations. He also is a past president of ASPPA.

Robert M. Kaplan, CPC, QPA, CFP, APA, is the vice president, national training consultant for Voya. He is currently a Co-Chair of ASPPA’s Government Affairs Committee and is a member of ASPPA’s Board of Directors.