Safe Harbor Act

HRH

A collegue has mentioned to me a Safe Harbor Act initiated in August by Homeland Security which requires more action on SS No-Match letters. Can anyone comment on this? Many thanks!

SMace

I thought the Safe Harbor had to do with 401k.

I know if you get no-match SS #letters and don't correct them there is a fine. It should say on the letter.

Dutch2

Same here... only Safe Harbor I know of has to do with 401(k) Plans.

Rockie

Safe harbor does have to do with 401(k).

The short answer is Safe Harbor was put into place by the IRS as a means whereby companies can elect to automatically deposit a certain amount of money into employees' 401(k) accounts each year without having to go through a cumbersome testing process. This process is to ensure that the company is not "top heavy" in their 401(k) contributions which would unfairly benefit higher earning employees. The IRS allows employers to either go through the testing process or elect the Safe Harbor. There are about 4 different Safe harbor elections that a company can choose from. Companies have to declare the type of contribution it will make and notify employees before the beginning of the year.

A wealth of information can be found about Safe Harbor on line.

davids

The term "safe harbor" is used relative to several statutes. The term refers to provisions that allow someone to rectify mistakes, if made in good faith, without penalty. For instance, FLSA has a safe harbor provision. In that instance it has to do with an employer who makes improper payroll deductions being able to correct the errors without being subject to other penalties if the errors were good faith mistakes.

Relative to Social Security no-match letters, the safe harbor provisions provide the employer with relief from penalties if they act in good faith to rectify any mismatches. There are proscribed actions that the employer has to take to be able to invoke the safe harbor provisions.

HRH

I have tried in vain to find this statute regarding SS No Match letters. Can anyone help?? Many thanks!

Lisa TBM

Hello, there is a toll free number on the actual no match letter-800-772-6270. I am certain they should be able to help you. Also there are a lot of legal opinion/review documents around. I have one from an association that I belong to. I can share if you would like, send me an email.