What is a Safe Harbor 401(k) Plan?
If you are a fiduciary for your company’s employee retirement or 401(k) plan, you must comply with ERISA guidelines and ensure it passes annual discrimination tests. One option that would limit your liability and allow you to avoid these tests would be to set up your employee retirement plan as a safe harbor 401(k) plan rather than a traditional 401(k).
A safe harbor 401(k) plan is similar to a traditional 401(k) plan, but the key difference is that employee contributions must be fully vested when made. Unlike traditional 401(k) contributions, all employees will have their contributions fully vested and will be matched by a set percentage immediately when made, regardless of each participant’s tenure with your company. These contributions may be employer matching contributions, limited to employees who defer, or employer contributions made on behalf of all eligible employees, regardless of whether they make elective deferrals.
The advantage to setting up your employee retirement plan in a safe harbor 401(k) plan is that it will not be subject to complex annual nondiscrimination tests that apply to traditional 401(k) plans. That will reduce your liability as a fiduciary and ensure that your employee retirement plan complies with federal guidelines.
If you are a fiduciary for your company’s employee retirement plan and are unsure about the necessary steps to set your plan up inside a safe harbor 401(k), I can help. I specialize in evaluating employee retirement plans, adding 99% value, and ensuring maximum returns for participants and minimum liability for fiduciaries. Contact me today if you’re ready to get the most value from your company’s retirement plan and protect yourself from repercussions as a fiduciary.
If you are a fiduciary for your company’s employee retirement plan and are concerned about your current investment options, I can help. My specialty is reviewing and adding 99% value to employee retirement plans. Contact me today if you’re ready to get the most value from your company’s retirement plan and protect yourself from personal liability as a fiduciary.