A Reminder about the Rules for Hardship Withdrawals. The opportunities to take in-service distributions from retirement plans are limited prior to age 59½. An exception is hardship withdrawals.

Safe harbor 401(k) plans are the most popular type of 401(k) used by small businesses today. Safe harbor 401(k) plans are a great benefit for all employees: by providing a certain contribution to all eligible staff, business owners, and other highly-paid employees, safe harbor 401k plans allow employees to fully save up to IRS limits ($57,000 for 2020, or $63,500 if over age 50).

Department of Labor - Electronic Disclosure Rules. The new safe harbor permits the following two optional methods of electronic delivery:

Employers have seen and continue to see changes in their current business environment. As they explore options to reduce costs, some may find themselves needing to reduce the employer contributions into their retirement plans. A popular 401(k) design option is the safe harbor 401(k) which requires either a non-elective employer contribution or an employer match.

It may be advantageous for a plan sponsor to consider adopting a traditional safe harbor design for their retirement plan. Adopting a safe harbor retirement plan design permits an employer to essentially avoid discrimination testing (the testing is deemed met).

One of the most significant pieces of retirement legislation in recent history, the SECURE Act, draws from a wide-array of bipartisan bills and seeks to make it easier for businesses to offer retirement plans, and for individuals to save for retirement.

It has been 13 years since Congress enacted the Pension Protection Act of 2006, the last piece of major legislation affecting retirement plans. Significant provisions affecting retirement plans were included in various versions of President Trump’s tax reform bill enacted in 2017, but Congress ultimately punted, and none of them made it into the final bill.

Hardship Withdrawals – The Internal Revenue Service Issues Proposed Regulation Reflecting Statutory Changes