Safe Harbor 401(k)

The last thing you need is added complexity in running your business. A Safe Harbor 401(k) can be a complicated retirement plan option – so let us take the guesswork out of it. Our employee benefit administrators can help you with the details so that you remain compliant.

With a Safe Harbor 401(k), you, as the business owner, must be willing to make required contributions in the form of a match. Any size business may find these plans attractive, but take a closer look if:

  • You have fewer than 25 employees.
  • You are open to making required employer contributions.

A Safe Harbor 401(k) lets you contribute the maximum amount to your own account. But you must also provide a “safe harbor” match or contribution to employees’ accounts as a percentage of their compensation. This means you and your highly compensated employees can maximize tax-deferred contributions without the restrictions of a traditional plan that doesn’t require matching.

Contribution Features

  • All participants can make the maximum salary deferral contribution.
  • Contributions can be pretax, after-tax (Roth deferral contributions) or both.
  • Total contributions from both sources (employer and employee) may not exceed 100% of income or $55,000 per eligible participant.
  • The employer is required either to match employee contributions (100% of the participants’ first 3% of salary and 50% of the next 2% of salary) or provide a non-elective contribution (3% of salary for all eligible employees).

For more information, contact one of our employee benefit administrators.

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