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Safe Harbor 401(k) plans are
like traditional 401(k) plans, but they offer advantages to companies at risk of failing the non-discrimination
tests. Safe Harbor Plans are deemed to satisfy these tests, so business owners and other
highly compensated employees may defer the maximum contribution regardless of low participation
from non-highly compensated employees.
Plans can meet the Safe Harbor requirement
with matching contributions or non-elective contributions:
- (Basic) Match
100% of the first 3% of compensation, plus 50% of the next 2% of compensation
or
- (Enhanced) Match
100% on the first 4% of compensation or
- (Non-Elective)
Contribute 3% of compensation to all eligible employees.
Employer Advantages
- Is mostly funded
from dollars otherwise paid as salary to employees
- Lets you deduct
your contributions from taxes as a business expense
- Helps recruit
and retain quality employees
- Helps employees
build retirement security
- Class Allocation
feature available
- Simplified one-person
feature available
Employee Advantages
- Receive
immediate vesting on Safe Harbor contributions.
- Save
through easy payroll deduction
- Choose
the amount they want to save
- Change
the amount saved to meet current needs
- Reduce
their taxable income
- Defer
taxes on the amount saved and its earnings until the employees receive
benefits from the plan
View the Safe Harbor Plan Highlight Sheet
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PenSys Safe Harbor Plan