Safe Harbor Plans: How To Create and Benefits To You

HOW IT WORKS:

  • Requires Annual Notification to employees
  • Plan Documents must be prepared or amended to provide for a Safe Harbor plan
  • Usually Requires 100% Vesting on Employer Contributions
  • 3 Plan Options now available:
    1. 1. Matching formula to incentivize employees (both Traditional & Enhanced versions)
    2. 2. Non-Elective contribution to all Eligible Employees (at least 3% of compensation)
    3. 3. QACA – Combines Automatic Enrollment with Auto Increase, plus allows for optional 2-year vesting schedule.
  • Annual plan design review with Compass

BENEFITS FOR YOU:

  • Allows Owners & key executives to maximize their 401k contributions
  • Passes certain annual compliance tests
  • Prevents 401(k) refunds to HCEs at the end of the tax year