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Safe harbor reduction or suspension of contributions relief (2020-52)

On June 29, 2020, the Internal Revenue Service (IRS) issued Notice 2020-52, which provides relief to employers to reduce or suspend safe harbor contributions into a qualified plan.

Employers no longer have to suffer an economic loss or have provided a “maybe not” notice to the participants at the beginning of the plan year. The qualified plan must be amended no later than the date that the reduction or suspension is effective, but no later than Aug. 31, 2020.

For safe harbor matching plans, employers must provide a revised safe harbor notice 30 days prior to the reduction or suspension of safe harbor matching contributions.

For safe harbor nonelective plans, employers no longer have to provide a 30-day notice for reduction or suspension of safe harbor nonelective contributions; instead, notice must be given by Aug. 31, 2020. The Setting Every Community Up for Retirement Enhancement (SECURE) Act eliminated the annual safe harbor notice for safe harbor nonelective contributions.

For more information on this topic, or to learn how Baker Tilly specialists can help, contact our team.

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