401(k) Pension Plan Safe Harbor Information and FAQs Available

At this time of year, many cooperatives consider adopting the Safe Harbor provision in their 401(k) Pension Plan. If your co-op is among them, be sure to read the Safe Harbor frequently asked questions (FAQ) document describing the requirements and potential benefits of Safe Harbor. You’ll find the FAQ on the Employee Benefits website at Document Library > Documents for Co-ops > Retirement Plans > 401(k) Pension Plan > Safe Harbor FAQs for Non-Safe Harbor Co-ops. Consider it carefully if your co-op is interested in exploring the provision for the 2016 plan year or beyond.

Why adopt Safe Harbor?
The Safe Harbor provision is attractive to many co-ops because it eliminates the need for the yearly actual deferral percentage (ADP) test. It also allows highly compensated 401(k) Plan participants to contribute up to the annual IRS deferral limit without risk of excess deferral refunds. The Safe Harbor provision also may help reduce the administrative burden on your co-op by simplifying or eliminating additional 401(k) nondiscrimination tests. See the FAQ for a more detailed discussion.

Next steps
If your co-op is interested in Safe Harbor for 2016, take these time-sensitive steps. First, complete the Safe Harbor Adoption Agreement and board resolution by October 9, 2015. Then, you must distribute the Safe Harbor notice to your employees by November 30, 2015 for the 2016 plan year.

If you’re planning a January 1, 2016 effective date, contact your field representative as soon as possible to begin the process. Benefits compliance will join the discussion and will work with you to analyze the impact of the change on your plan, obtain the required documents and answer your questions.

New for 2016
2016 Safe Harbor notices will be released in late October. Starting this year, benefits administrators will receive a Message Center alert with a link to the notice on the Employee Benefits website with distribution instructions for 401(k) Plan participants. You’ll also use the Employee Benefits website to acknowledge distributing the notice.

If you have questions about the Safe Harbor provision, contact benefits compliance at 866.673.2299, option 7, or email us at pension.compliance@nreca.coop.