Don’t Miss an Opportunity: Upcoming Safe Harbor 401(k) Deadline!

A safe harbor 401(k) plan can provide significant benefits for employers. Don’t miss out on this option; now is a great time to determine if it could be a good fit!  

 Benefits of Safe Harbor 401(k) Plans: 

  • Owner deduction and savings of $19,500 from income ($26,000 if age 50), regardless of employee participation
  • May allow for additional profit sharing or matching contributions
  • Can be paired with cash balance/defined benefit plans for even larger tax-deductible contributions

To meet requirements, company contributions can be either a flat 3% nonelective contribution to eligible employees, or a matching contribution of 4% of pay for those who defer.

Deadlines for Establishing a New Plan

The deadline to establish a new safe harbor plan for this calendar year is October 1. If employers wish to make a safe harbor matching contribution, they must elect it at this time.  However, a safe harbor nonelective provision can be added as late as December 1 (if a deferral feature is in effect by October 1).


Deadline for an Existing 401(k) Plan Adding a 3% Safe Harbor Provision

Based on the SECURE Act, an existing 401(k) plan can add a safe harbor feature without advance notice! The deadline to amend to a safe harbor plan with a 3% nonelective contribution to all eligible employees is December 1.

If this deadline is missed, however, an existing 401(k) plan can amend until December 31 of the following calendar year if the employer makes a 4% nonelective contribution.

Interested in discussing these options more? Then fill out the quick form below and we’ll reach out with more information!

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