Photo of Cecilia A. Roth

The Internal Revenue Service (IRS) issued Notice 2020-52 on June 29, 2020, making it temporarily easier for employers to suspend or reduce matching contributions and nonelective contributions to safe harbor 401(k) plans mid-year.

As described in our earlier blog post, the Internal Revenue Code of 1986, as amended (the “Code”) imposes rules that limit the ability of employers to suspend or reduce safe harbor matching contributions and safe harbor nonelective contributions, in the middle of a plan year, to a plan that is intended to be a safe harbor plan under sections 401(k) or 401(m) of the Code (such a plan referred to below as a “safe harbor plan”). Notice 2020-52 eases several of those restrictions for a limited period of time in recognition of the ongoing economic effects of the COVID-19 pandemic. The relief also applies to plans subject to section 403(b) of the Code that apply section 401(m) safe harbor rules.
Continue Reading IRS Eases Ability of Employers to Reduce or Suspend Safe Harbor Matching and Nonelective Contributions

During the economic downturn associated with the COVID-19 pandemic, some 401(k) plan sponsors may be considering a mid-year reduction or suspension of matching contributions or nonelective contributions to their 401(k) plans as a cost-saving measure. Generally, whether the matching or nonelective contributions may be reduced or suspended will depend on the specific terms of the plan. In addition, in the case of  a plan that is intended to be a safe harbor plan under sections 401(k) or 401(m) of the Internal Revenue Code of 1986 as amended (the “Code”), the Code imposes particularly restrictive rules limiting mid-year changes. The following summarizes steps that a plan sponsor must take to reduce or suspend matching or nonelective contributions to its safe harbor plan during the plan year without jeopardizing the plan’s tax-qualified status.
Continue Reading Reducing or Suspending Matching or Nonelective Contributions Under a Safe Harbor Plan

On March 27, 2020, President Trump signed the largest economic stimulus bill in US history: the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”). The CARES Act provides resources to support our health care system in the fight against the COVID-19 pandemic, cash and other forms of relief for individual citizen; loans and