what is a safe harbor match?
“Safe Harbor Match” refers a required employer contributed % match for employee contributions into a Safe Harbor 401K plan. Safe Harbor 401K plans have four requirements: – required: % compensation or % matching contribution – 100% immediate required contribution vesting – annual participant information/rights notice – restricted withdrawals By doing so, Safe Harbor 401K plans do not need to meet “anti-discrimination” requirements/testing which other 401K plans are subject to. Contact me (LeheckaG on Askville) If you need more assistance or information. ———– The following examples will help illustrate whether a safe harbor 401(k) plan is cost effective. Example 1 Salary Deferrals 401(k)% Owner $225,000 $15,500 6.89% Employee 1 50,000 0 0.00 Employee 2 30,000 500 1.67 Employee 3 45,000 500 1.11 In this example, the average 401(k) percentage for the employees is 0.93%. Without going into detail of the 401(k) testing requirements, the employee average would have to be at least 4.89