Section 7. Nondiscrimination Tests

The ADP and ACP tests described in sections [ ] and [ ] of the Plan are treated as satisfied for any Year for which the 401(k) SIMPLE Provisions apply. this article applies.

(IN THE BLANK ABOVE, INSERT THE PLAN SECTION CORRESPONDING TO CODA LRMs VI AND XII.)

(Note to reviewer: Section 332 of the SECURE 2.0 Act provides that an employer may, effective for plan years beginning after December 31, 2023, elect at any time during a year to terminate the qualified salary reduction arrangement under this section, but only if the employer establishes and maintains (as of the day after the termination date) a safe harbor plan to replace the terminated arrangement, provided the conditions of Code § 408(p)(11) are met. Section 332 was not included on the Cumulative List, so sample plan language is not provided in this regard. However, see Part G of Notice 2024-2 for administrative guidance in this regard. ).

Sample Adoption Agreement Language:

401(k) SIMPLE Provisions

103 | Cash or Deferred Arrangement (CODA) LRM Package 01-2024

[ ] By checking this box, the Employer elects to have the 401(k) SIMPLE Provisions described in Article [ ] apply to the Plan. (This box may only be checked if the Plan uses a calendar-year plan year and the Employer is an Eligible Employer as defined in Section 2.2 of Article [ ].) An amendment to have the 401(k) SIMPLE Provisions no longer apply is effective the next following January 1 unless the plan enacts the provsions of section 8, Replacement with Safe Harbor 401(k)..

(Note to reviewer: The following election is applicable to taxable years beginning after December 31, 2023. If so elected, it must be made prior to when the employer provides the annual notice to each employee of the employee’s opportunity to enter into a salary reduction agreement or to modify a prior agreement for that calendar year. See Q&A G-1 of Notice 98-4.)

[ ] By checking this box, the Employer elects to apply the increased limits provided by Section 117 of the SECURE 2.0 Act of 2022.

(Note to reviewer: If the above is selected, the employer must notify employees of the increased limits. The notice must be included in the annual employer notification that informs employees of the opportunity to enter into a salary reduction agreement or to modify a prior agreement. The employer must also notify employees of the increased matching contribution or increased nonelective contribution, and should (1) notify the SIMPLE 401(k) plan’s financial institution and payroll provider of the increased limits, and (2) keep records of all actions concerning the increased limits. Notice need not be provided to the Service in this regard.)

(Note to reviewer: An employer’s election to apply the increased limits is effective until it is revoked by the employer. If so revoked, the employer must take and document formal written action, and provide notice to each employee of their opportunity to enter into a salary reduction agreement or to modify a prior agreement fo the next year. Such a revocation must be reflected in plan terms, such as by the following adoption agreement election.)

[ ] By checking this box, the Employer elects to revoke its previous election to apply the increased limits provided by Section 117 of the SECURE 2.0 Act of 2022.

[ ] The nonelective contribution d ution de scrib eescribed in Section 3.2(b) of the Plan will be allocated to all Eligible Employees who received at least [$ ] [INSERT AN AMOUNT LESS THAN $5,000] Compensation for the Year.