We typically recommend making changes to a Safe Harbor plan before the start of the plan year or prior to January 1st. We understand that circumstances may arise where adjustments are needed during the year. Here are some of your options:
1. Changing Employer Contribution Mid-Year:
The ability to modify the employer contribution in a Safe Harbor plan mid-year depends on various factors, including the type of change you wish to make (e.g., altering the match or nonelective contribution) and the timing of the proposed change. While changes to employer contributions mid-year are generally discouraged, there may be exceptions.
You can reduce or suspend your Safe Harbor employer contribution (match or nonelective) mid year if you meet either one of these criteria:
- Your business is operating at an economic loss.
- The Safe Harbor notice you provided your employees before the start of the plan year includes a statement that you may reduce or suspend contributions mid-year.
2. Adding a Safe Harbor Feature Mid-Year:
Adding a Safe Harbor feature to your plan after the start of the plan year typically follows the same principles as changing the employer contribution. It's important to consider the type of Safe Harbor contribution (match or nonelective) and the timing of the proposed addition. While it may be more challenging to add a Safe Harbor feature mid-year, we're here to guide you through the process and explore any available options.