SEC Money Market Reform Will Affect Many Small Business 401ks in 2016; 401k Fiduciaries Should Understand its Consequences

SEC money market reforms will take effect in 2016. If a 401k includes a money market fund in its investment lineup, small business fiduciaries should understand the consequences of these reforms in order to decide if their plan’s money market fund should be replaced in advance of the new rules.

Fiduciary Tip of the Week

The IRS released text of Notice 2016-16, which addresses mid-year changes to safe harbor plans and safe harbor notices.  This notice provides long-awaited guidance on mid-year changes to a safe harbor plan.

In Announcement 2007-59, the IRS said safe harbor 401(k) plans can only be amended mid-year in the following ways:

• Add Roth
• Add or expand hardship distributions
• Suspend or reduce safe harbor contributions

If you would like additional information about these changes, please contact your Client Relationship Manager.

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