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, potential benefits and responsibilities of Safe Harbor. You’ll find the FAQ on the Employee Benefits website. Look it over carefully if your co-op is interested in exploring the provision for the 2015 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.

Next steps
If you’re interested in Safe Harbor for 2015, you must take several time-sensitive steps. The Safe Harbor Plan Adoption Agreement and board resolution must be completed and returned to compliance by October 17, 2014. You also need to distribute the Safe Harbor notice to your employees by November 28, 2014 for the 2015 plan year.

If you’re planning a January 1, 2015 effective date, please contact your field representative as soon as possible to begin the process. The benefits compliance team will then 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.

If your co-op already has the Safe Harbor provision, your 2015 notice, along with further guidance, will be sent to you in October. If you have questions about the Safe Harbor provision, contact the benefits compliance team at 1.866.673.2299, option 7, or email us at pension.compliance@nreca.coop.