The U.S. Treasury is providing more flexibility to small businesses facing financial distress. New rules will allow those businesses to suspend contributions to safe harbor 401(k)s.
According to Bloomberg: “The rules, effective immediately, allow the companies to stop making payments to their so-called safe-harbor 401(k)s, without having to terminate the programs as previously required. Companies seeking the relief must show significant financial distress, such as the loss of money from low sales or a rise in health-care costs, the Treasury said in a statement today.”
In safe-harbor 401(k) plan used often by small businesses, companies match employee contributions equal to 3 percent of annual compensation. The contributions are paid regardless of whether employees add their own money.