Details of Public Law 117-328, section 121 , Starter 401(k) Plans for Employers with No Retirement Plan

The provision would create two types of retirement plans for qualified employers with no retirement plan: a starter 401(k) deferral-only arrangement and a safe harbor deferral-only plan.

The starter 401(k) deferral-only arrangement is a cash or deferral arrangement that meets specified automatic deferral requirements, contribution limitations, and notice requirements. These requirements would be considered met if eligible employees are treated as having elected to have the employer make elective contributions in an amount equal to a qualified percentage of compensation. Employees could opt out of the election.

The safe harbor deferral-only plan has similar requirements as the starter 401(k) deferral-only arrangement for automatic deferral requirements, contribution limitations, and notice requirements.

The special rules for top-heavy plans would not apply to 401(k) deferral-only arrangements or safe-harbor deferral-only plans.