Safe
Harbor
Safe Harbor 401(k) plans, like traditional 401(k) plans, are a type of company-sponsored retirement plan allowing employees to save for retirement on a tax-favored basis.
These plans permit employees to make pre-tax salary deferral contributions, and while they require the employer to fund a minimum contribution on behalf of participants, they offer a number of advantages over traditional 401(k) plans.
Features and Benefits
Over the last several years these plans have become very popular with employers because of the features and benefits listed below:
Call Today - 1-334-309-4181
Safe Harbor 401(k) plans, like traditional 401(k) plans, are a type of company-sponsored retirement plan allowing employees to save for retirement on a tax-favored basis.
These plans permit employees to make pre-tax salary deferral contributions, and while they require the employer to fund a minimum contribution on behalf of participants, they offer a number of advantages over traditional 401(k) plans.
Features and Benefits
Over the last several years these plans have become very popular with employers because of the features and benefits listed below:
- Pre-Tax Salary Deferrals – Like traditional 401(k) plans, these plans allow employees to contribute pre-tax salary deferrals of up to $16,500.
- Catch-up Contributions – Employees over age 50 can make catch-up contributions of up to $5,500 per year.
- Employer Contributions – Safe Harbor 401(k) plans require the employer to make fully vested minimum contributions as described in detail below. Employers can elect to contribute additional matching and / or profit sharing contributions above the minimum required.
- Vesting Options – While designated Safe Harbor Contributions must be fully vested, any additional employer contributions can be made subject to a vesting schedule.
- Reduce Complexity – Safe Harbor Plans reduce complexity because they are automatically deemed to pass the ADP and ACP Non-discrimination Tests required by traditional 401(k) Plans.
- Maximize Contributions – These plans allow Highly Compensated Employees to contribute the maximum salary deferral without concern about refunds caused by the ADP and ACP tests resulting from low employee participation.
- Flexible Design – Safe Harbor 401(k) plans can be offered with the same flexible features as traditional plans, including eligibility, loans, and distribution options. They can also be designed to give employers flexibility each year in deciding the plan's status as a safe harbor plan.
Call Today - 1-334-309-4181
