Simplify compliance, reduce taxes, and secure your future with a plan tailored for retirement advisors.
Maximize Retirement Savings with a Solo Safe Harbor 401(k)
What is a Safe Harbor 401(k)?
A Safe Harbor 401(k) plan is a retirement savings option designed to simplify compliance with IRS nondiscrimination tests, ensuring that all employees, regardless of compensation level, have equitable access to retirement benefits. By meeting specific employer contribution and vesting requirements, these plans automatically satisfy certain IRS tests, thereby reducing administrative burdens and allowing highly compensated employees (HCEs) to maximize their contributions without the risk of corrective actions.
Benefits of Safe Harbor 401(k) Plans
Implementing a Safe Harbor 401(k) plan offers several advantages:
Simplified Compliance
By meeting Safe Harbor requirements, employers avoid the complexities of annual nondiscrimination testing.
Maximized Contributions
HCEs can contribute the maximum allowable amounts without concern for testing failures.
Enhanced Employee Benefits
Offering a Safe Harbor plan can improve employee satisfaction and retention by providing immediate vesting and employer contributions.
Understanding Safe Harbor 401(k) Plans
Traditional 401(k) plans are subject to annual nondiscrimination tests, such as the Actual Deferral Percentage (ADP) and Actual Contribution Percentage (ACP) tests, which compare the contributions of HCEs to those of non-highly compensated employees (NHCEs). Failing these tests can result in penalties and require corrective measures, such as refunding contributions to HCEs. Safe Harbor 401(k) plans are structured to automatically pass these tests by adhering to specific employer contribution formulas and immediate vesting schedules.
Download the Ultimate Guide to Solo Safe Harbor 401(k) Plans
Get everything you need to know about setting up and maximizing a Solo Safe Harbor 401(k) plan, designed by expert ANTHEM retirement advisors.
