While Safe Harbor 401(k) Plans have become increasingly popular, the IRS rules concerning mid-year amendments to such plans were ambiguous and created uncertainty among the benefits community.   In 2016, the IRS issued guidance that allows for most mid-year amendments, which is a welcome development for plan sponsors. 

The rules in question involved the ability of such plans to make changes (amendments) to their plans during the year.    In general, retirement plans may be amended during the current year to add or change provisions as the sponsor deems worthwhile.   For example, if an employer decided to add Participant Loans to their plan, that could be added during the current year by adopting a plan amendment.  However, the rules regarding Safe Harbor 401(k) Plans seemed to indicate that no such amendments could be made during the current year and would have to wait until the beginning of the following plan year.  This is even though a provision such as adding loans would not change the nature of the Safe Harbor contributions, nor the content of the Safe Harbor Notice.   

IRS Notice 2016-16 clarifies that amendments (with a few specific exceptions) may be made during the current plan year for a Safe Harbor 401(k).    The important thing to keep in mind, however, is that if an amendment changes a provision in the Safe Harbor Notice, then a new Notice must be provided to participants (30-90 days prior to effective date) and participants need to be given a reasonable opportunity to change their elections.     


​​For 401(k) Plans and their participants, no issue has received more attention in recent years than the fees charged to participant accounts.  This focus on fees has led to increased attention to the reasonableness of fees that are charged by providers, the disclosure of such expenses and potential conflicts of interest. 

For sponsors of 401(k) Plans, it can often be a challenge to determine exactly how much is being charged and to make an “apples-to-apples” comparison between providers.   This led to the Department of Labor (DOL) to issue the Service Provider Fee Disclosure rules under ERISA Section 408(b)(2) in 2012.  Providers of services to retirement plans are now required to provide a disclosure statement to the plan sponsor (employer), detailing the services provided, costs involved, types of compensation received by the provider and fund expenses.    

The DOL also wanted participants in 401(k) Plans to have additional information regarding their investment options.   Another development is the 404(a) Participant Fee Disclosure Notice.   This annual notice is designed to enable participants to make a comparison of investment options, as well as the expenses involved.  The notice is required to provide plan information involving the funds available, how to provide investment instructions and expenses.   In addition, charts are required that detail past performance, benchmarks and expense ratios.

The two disclosure notices are now a common part of the 401(k) world, but in 2016 the DOL issued final regulations concerning investment advice and whether rendering such advice constitutes being a “fiduciary.”   The regulations detail new steps and disclosures that advisors to 401(k) Plans must take to continue meeting the fiduciary exemption.   Part of the goal here is to force investment advisors to avoid conflicts of interest, where they may steer participants to investments that benefit themselves vs. the participant. 

Looking ahead, the “5500" return for qualified plans is going to be significantly revised over the next few years.  A major part of that will be enhanced reporting of fees, via a revised Schedule C - Service Provider Information.    


                                                  2018                2019 

Taxable Wage Base                     128,400             132,900
Includable Compensation Limit      275,000            280,000
401(k)/403(b) Deferral
Limit (Under Age 50)                    18,500                19,000
Catch-Up Limit (Age 50+)               6,000                 6,000
Defined Contribution 415 Limit       55,000*              56,000**
Defined Benefit 415 Limit             220,000              225,000
SIMPLE Deferral Limit                    12,500               13,000
SIMPLE 401(k) Catch-Up Limit          3,000                 3,000
IRA Contribution Limit                      5,500                6,000
IRA Catch-Up Limit                         1,000                 1,000
Highly Compensated Employee      120,000              125,000
SEP Compensation Floor                     600                   600

*  $61,000 with 401(k) if age 50+
** $62,000 with 401(k) if age 50+