When can a safe harbor non-elective contribution be added to a plan?

A safe harbor non-elective contribution can be made as late as the last day of the plan year, which ensures that the employer still meets the requirements to be considered a safe harbor plan for that plan year. The non-elective contribution must be made for all eligible employees, regardless of whether they have contributed to the plan themselves.

Making the contribution by the last day of the year provides flexibility for employers to assess their financial situation and make contributions accordingly, without the pressure of needing to commit too early in the year. It allows companies to ensure they are adhering to the safe harbor provisions and, therefore, can avoid certain compliance tests.

Understanding the timing requirements for such contributions is essential, as it directly impacts the plan’s operational compliance and its ability to provide benefits to employees effectively, reinforcing the goal of promoting employee retirement savings.