By Cory Cuffley, CFP®, CPA, C(k)P®, CRPS®, AIF®

As we head into the second half of 2021, we wanted you to be aware of some important deadlines as well as potential benefits to starting a new retirement plan.

Starting a New Safe Harbor Retirement Plan in 2021

For companies looking to begin a new retirement plan in 2021, the effective date for that plan to qualify as a Safe Harbor plan is no later than October 1, 2021. With several things needing to be done to have the plan live by this date, companies will need to get their information submitted and plan design completed as soon as possible.

Start-Up Tax Credit

The SECURE Act also increased the tax credit available to plan sponsors who start a new retirement plan. These tax credits are available to employers with no more than 100 employees in the preceding year. For this credit, a plan sponsor may receive up to a 50% credit for retirement plan start-up costs, up to a maximum of $5,000. These are also received over a three-year period, beginning with the year the plan is established.

Automatic Enrollment Credit

In addition to the start-up credits, a plan sponsor can receive a $500 per year tax credit (up to 3 years) for including automatic enrollment in their plan design. This is not exclusive to start-up plans. A plan that currently exists but does not have automatic enrollment is eligible for this credit simply by adding the provision.

Safe Harbor 401(k) Flexibility

The SECURE Act also provided some increased flexibility to current 401(k) plans with respect to certain Safe Harbor requirements. These updates include:

  • Elimination of the annual notice requirement for plans using the non-elective contribution formula.
  • An existing 401(k) can now elect to become a Safe Harbor plan at mid-year, so long as the amendment takes place before the 30th day before the close of the plan year. For this to be allowable, the plan would have to adopt the 3% non-elective formula.
  • An existing 401(k) can elect to become a Safe Harbor plan up to the 30th before the close of the following plan year; however, the plan must use a 4% non-elective formula.


Cory CuffleyCory’s primary responsibilities include working with the firm’s corporate retirement plan clients, providing participant education, and business development. He holds a master’s degree in Accounting and Professional Consultancy, and recently was honorably discharged as a member of the Pennsylvania Army National Guard. Cory enjoys spending time with his wife Megan, their daughter Claire, and their two dogs.