Act Now If You’re Considering 401(k) Safe Harbor for 2020 or 2021

If your cooperative is thinking of adding the Safe Harbor provision to your NRECA-sponsored 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 using an employer base contribution formula no longer need to give employees an advance Safe Harbor notice. For this reason, your co-op could still choose to adopt Safe Harbor for the current plan year up until November 2020. Or you could adopt the provision for 2021 using either a matching or base formula. Either way, reach out to your field representative right away.

When appropriate, the benefits compliance team will join the discussion. 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 Safe Harbor Adoption Agreement (provided to you by NRECA) and board resolution.

Co-ops that make Safe Harbor matching contributions will receive their 2021 Safe Harbor notice (a link will be provided to you through a Message Center notification) in late October. When you receive the notice, give it to employees by November 30 so that they can make an educated decision about 2021 plan participation. Then acknowledge distribution through the Employee Benefits website.

Co-ops with plans that satisfy the Safe Harbor by providing a base employer contribution no longer need to give the annual Safe Harbor notice to participants. NRECA will notify your co-op individually by email before October.

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.