New IRS Guidance on 401(k) Safe Harbor Rules Provides Flexibility for Plan Sponsors
- Topics:
- Stock Options
- Tags:
- 401(k),
- 401(k) Plan,
- Benefits,
- Human Resources,
- Internal Revenue Service,
- Plan Sponsor,
- Plan Year,
- Retirement Plans,
- Safe Harbor
- Source:
- Reed Elsevier
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Overview: The Internal Revenue Service recently issued additional guidance on safe harbor requirements for 401(k) plans. Safe harbor contributions formulas became available for most 401(k) plans beginning with the 1999 plan year. This article discusses safe harbor rules; a plan sponsor does not have to perform the actual deferral percentage ("ADP") test for pre-tax contributions for a plan year. Other safe harbor contribution rules enable a plan sponsor to avoid performing the actual contribution percentage ("ACP") test for matching contributions for a plan year, although the ACP test still has to be performed for any after-tax employee contributions.
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Format: HTML | Date: May 2003 | Pages: 1
