Understanding Safe Harbor 401(k) Plans for Small Businesses
Contribution limits and testing rules: Learn why traditional 401(k) plans may limit owner and executive contributions when participation is low, and how safe harbor designs address this issue.
Safe harbor plan option: Understand how safe harbor plans automatically satisfy key compliance tests when certain contribution requirements are met.
Safe harbor requirements: Review the required employer contributions and vesting rules that apply, along with the fairness standards that still must be followed.
Safe harbor 401(k) plans are designed to help employers meet IRS requirements while simplifying annual compliance testing. By following specific contribution rules, plan sponsors can automatically satisfy key nondiscrimination tests that may otherwise limit contributions for owners and highly compensated employees.
Download this PDF resource to learn how safe harbor plans work, what contribution options are available, and which requirements apply to small business plans.