Act Now to Add 401(k) Safe Harbor for 2022 or 2023

If your cooperative is thinking of adding the Safe Harbor provision to your 401(k) Pension Plan, now is a good time to take action.

Safe Harbor is attractive to certain co-ops because with the provision in place, your co-op’s 401(k) Plan is deemed to pass the actual deferral percentage (ADP) test. Other potential benefits and additional requirements depend on your co-op’s circumstances and on the Safe Harbor formula you choose to adopt.

Under the SECURE Act, plans that meet the Safe Harbor requirement solely by means of an employer base contribution formula do not need to give employees an advance Safe Harbor notice. Your co-op could still choose to adopt Safe Harbor for the current plan year up until November 2022. Or you could adopt the provision for 2023 using either a matching or base formula. NRECA will work with you to explain the benefits and requirements, choose a desired implementation date, and assess the impact of the change on your plan. If you decide to add the provision, you must complete and return a new adoption agreement (provided to you by NRECA) and board resolution.

NRECA will notify all Safe Harbor co-ops individually whether to expect a Safe Harbor notice. If required, your notice will be released online in mid-October. When you receive the notice, give it to employees by November 30 so that they can decide whether to participate in the plan. Then acknowledge distribution through the Employee Benefits website.

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