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Safe Harbor 401k plans-don’t miss the Opportunity-upcoming Safe Harbor 401(k) Deadline.

Safe Harbor 401k Plans-don’t miss the Opportunity-upcoming Safe Harbor 401(k) Deadline!

Benefits of a Safe Harbor 401(k) Plan

  • Relief from required ADP and ACP annual compliance testing
  • May allow for additional profit sharing or matching contributions
  • An Ideal Solution. Can be paired with a Cash Balance hybrid plan for an ideal solution for business owners looking to reduce tax liabilities with even larger tax deductible contributions and substantially accelerate retirement savings. Examples:
    • a 45-year old business owner could contribute $184,00 to his retirement plans.
    • a 55-year old professional could contribute $271,500 to her retirement plans.

To meet requirements, company contributions can be either a flat 3% non-elective contributions to eligible employees, or a matching contribution of up to 4% of pay.

Deadlines for Establishing a New Safe Harbor 401(k) Plan

The deadline to establish a new safe harbor plan for this calendar year is October 1. If a safe harbor matching contribution will be made, it is elected at this time. However, a safe harbor non-elective provision can be added as late as December 1 by adding a deferral feature by October 1.

Deadline for Existing 401(k) Plan Adding a 3% Safe Harbor Provision

Based on the recently passed SECURE Act, an existing 401(k) plan can add a safe harbor feature without advance notice! The deadline to amend your existing 401(k) plan to a safe harbor plan with a 3% non-elective contribution to all eligible employees is December 1.

If this deadline is missed, however, an existing 401(k) plan can amend until December 31 of the following calendar year if the employer makes a 4% non-elective contribution.

Interested in finding out more about these options including timely updates and valuable resources. Contact Mike Young at 714.716.4060 or fill out the quick form here.

While every effort has been taken in compiling this information to ensure that its contents are totally accurate, neither the publisher nor if different, the author can accept liability for any inaccuracies or changed circumstances of any information herein or for the consequences of any reliance placed upon it.

This publication is posted on the understanding that the publisher is not engaged in rendering legal, accounting, or other professional advice or services. Readers should always seek professional advice before entering into any commitments.