A Safe Harbor 401(k) is a popular plan for small employers. It allows an employer to maximize contributions for highly-compensated employees and satisfy non-discrimination requirements by making a minimum contribution, or match to all eligible and/or participating employees. A safe harbor plan also benefits non-highly compensated employees by providing them with a greater opportunity to save for retirement.

There are several formulas and methods available for a Safe Harbor plan and the best solution, as well as any restrictions, will vary from employer to employer. Hicks Pension Services can review a variety of scenarios to determine the best strategy for each business owner. There are other options available in addition to a safe harbor plan. However, a safe harbor plan may provide the easiest option to administer on an ongoing basis and may not be as costly you think.

If you, or your client would like to explore the feasibility of a safe harbor plan, it is important to begin the process as soon as possible. Plan documents must be updated accordingly and there are minimum required notice periods for all employees.

If you have any questions about this or any other qualified plan topics, please do not hesitate to contact Eric Petersen at (510) 790-1096 or [email protected].