Safe Harbor for corrections of employee elective deferral failures

Apr 21, 2023 | 2024, Retirement Plan Law

Under current law, plans with automatic enrollment and automatic escalation features could be subject to significant penalties for mistakenly missing a deferral contribution for an employee. New rules eliminate the penalty for this mistake if the following conditions are met:

  • A 45-day notice is given to the affected employee
  • Correct deferrals commence within 9 ½ months after the end of the plan year
  • The employer provides the employee with any matching contributions that would have been made if the failure had not occurred


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