What is a notable characteristic of safe harbor plans?

Safe harbor plans are designed to simplify the compliance process for 401(k) plans and provide certain protections for plan sponsors. A notable characteristic of these plans is the requirement for notification to participants annually. This notification is crucial as it informs participants about their rights and options under the safe harbor provisions, such as how contributions are made and the benefits of the plan.

Providing annual disclosure helps ensure that participants are aware of their contributions and how their accounts are performing, thereby promoting transparency and encouraging participation. Additionally, this requirement reinforces the plan's commitment to meeting regulatory standards and allows participants to make informed decisions regarding their retirement savings.

The other characteristics mentioned in the options do not accurately reflect the defining features of safe harbor plans. For instance, while these plans do provide certain contribution limits and mandates, they do not offer completely flexible contributions as participants must receive specific employer contributions. Additionally, while safe harbor plans can incur costs, they do not inherently have lower costs compared to traditional plans; cost varies based on the plan's structure and features. Lastly, while safe harbor plans do not require specific amendments to maintain their status, they still must comply with broader regulatory requirements. Overall, the annual notification requirement is a key feature that emphasizes participant communication and plan compliance.