As we get closer to the end of the year, now is the time for companies to consider adding or changing the design of their retirement plan. It is also a good time to think about revisions for next year.
While most design changes can be made mid-year, here are some upcoming deadlines that should be considered:
- Creating a new safe harbor plan for 2022 – the plan must be implemented no later than October 1, 2022.
- Adding a 3% safe harbor non-elective contribution to an existing plan for 2022 – plan must be amended no later than December 31, 2022.
- Adding a 4% safe harbor non-elective contribution to an existing plan for 2022 – plan must be amended no later than December 31, 2023.
- Adding a safe harbor match to an existing plan for 2023 – plan must be amended no later than December 31, 2022. Participant notices are required to be distributed no later than December 2, 2022.
Transitioning from a Simple IRA to a 401(k) in 2023
- Simple IRA must be terminated in 2022.
- Notices should be provided to participants no later than November 1, 2022.
This is the time of year to consider both safe harbor changes and SIMPLE IRA conversions. Let us know if you would like us to review a specific plan for you.
Utilizing a safe harbor plan is helpful when replacing a Simple IRA. The design looks similar to the Simple IRA with fixed employer contributions, however there are a lot more benefits to the 401(k), such as increased deferral limits and the ability to make Roth contributions. Compare the benefits of a Simple vs. 401(k) HERE.