QPA Blog Mid-Year Changes to Safe Harbor 401(k) Plans

In January 2016, the IRS issued Notice 2016-16 providing long-awaited guidance on when changes can be made to safe harbor 401(k) plans mid-year. Previous IRS guidance (formal and informal) seemed to indicate there were only limited circumstances under which a safe harbor plan could be amended prior to the first day of the following plan year. Thankfully, this notice reflects an apparent shift in the IRS's position and provides sponsors of safe harbor 401(k) plans with much greater flexibility throughout the year. The notice does contain a short list of changes that are specifically prohibited, but many changes are permissible provided certain conditions are satisfied.