ROBS 401k Safe Harbor Notice

The Purpose of the 401k ADP/ACP Safe Harbor Notice

A business (C-corporation) sponsoring a ROBS business financing 401(k) plan can avoid actual deferral percentage (ADP) and actual contribution percentage (ACP) testing if the ROBS plan satisfies specific safe harbor requirements. One of those ROBS 401(k) safe harbor plan requirements entails providing eligible employees with a notice that liste their rights under the plan.

Timing and Requirements of the ROBS 401k Safe Harbor Notice

The ROBS 401k funded employer is required to provide the 401(k) safe harbor notice to all eligible employees before each plan year for which the employer intends the 401(k) plan to meet the safe harbor requirements. The notice must be given at least 30 days, but no more than 90 days, before the start of each plan year.

Content Required in the ROBS 401k Safe Harbor Notice

The notice must explain the employees’ rights and obligations, and must be written so that the average employee can understand it. The notice must explain the following:

1. the safe harbor matching or nonelective contribution formula used by the ROBS 401k plan, including the different tiers that will apply to a matching formula, if applicable;

2. any other contributions that are offered by the ROBS 401k plan, and the requirements for receiving such contributions;

3. the plan definition of compensation and the maximum amount that employees may defer;

5. the administrative requirements and procedures for making deferral elections;

6. the time period in which a participant can make an election;

7. the distribution and vesting provisions that pertain to the safe harbor contributions; and

8. contact information that makes it easy for participants to get additional information about the plan, including how to request a summary plan description.


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