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the storick group 401k administrator

Low Fee Safe Harbor 401k Plan

Starting at $65 per year


Want to know how to avoid most annual compliance testing with a Safe Harbor 401(k) plan?

The answer lies below…

There are 3 types of Safe Harbor 401k Plans

  1. Non-Elective Safe Harbor: Employees who are eligible in a 401(k) plan receive an annual contribution of 3{bc669dfb3651bb8509a96034cbe7494d3a811fc0eedf0ddccb239fb9cb737439} of their salary from their employer. Those dollars are immediately and fully vested for employee whether or not they contribute to the plan.
  2. Basic Safe Harbor Match: An employer matches 100{bc669dfb3651bb8509a96034cbe7494d3a811fc0eedf0ddccb239fb9cb737439} of the first 3{bc669dfb3651bb8509a96034cbe7494d3a811fc0eedf0ddccb239fb9cb737439} for each employee’s contribution and 50{bc669dfb3651bb8509a96034cbe7494d3a811fc0eedf0ddccb239fb9cb737439} of the next 2{bc669dfb3651bb8509a96034cbe7494d3a811fc0eedf0ddccb239fb9cb737439} the employee adds in to their plan. In order for employees to receive a match, they are required to contribute to their 401(k) plan.
  3. Enhanced Safe Harbor Match: Employer’s match 100{bc669dfb3651bb8509a96034cbe7494d3a811fc0eedf0ddccb239fb9cb737439} of the first 4{bc669dfb3651bb8509a96034cbe7494d3a811fc0eedf0ddccb239fb9cb737439} for each employee’s contribution. Similar to the Basic Safe Harbor Match, employees are required to defer money to their 401(k) in order to receive any matching benefit.

What are the benefits of adding a Safe Harbor 401k Plan? 

Company’s who have highly compensated employees who are earning over $120,000 per year and own 5{bc669dfb3651bb8509a96034cbe7494d3a811fc0eedf0ddccb239fb9cb737439} (as of 2018, adjusted for inflation).  Adding a Safe Harbor Provision to a company 401(k), will allow those highly compensated employees to likely be able to max out their retirement contributions. As a company, you won’t have to worry about annual compliance testing. 

  • Safe Harbor provision exempts your 401(k) plan from most annual compliance testing.
  • Enhances owners and highly compensated employees’ personal retirement savings to contribute the maximum to the 401(k) plan.
  • Any employer contribution reduce an employer’s taxable income.

If your current 401(k)plan fails compliance testing, and you don’t add a Safe Harbor provision, those highly compensated employees may have limitations on in how much they can contribute toward their personal 401(k) plan. The l rule of thumb is employees can’t contribute more than 2{bc669dfb3651bb8509a96034cbe7494d3a811fc0eedf0ddccb239fb9cb737439} more than the average of all employees who are not highly compensated.

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Safe Harbor 401k Simple Enrollment






There are a few key components to consider when adding a Safe Harbor provision. Beginning with employer contributions, know that employees are immediately 100{bc669dfb3651bb8509a96034cbe7494d3a811fc0eedf0ddccb239fb9cb737439} vested. What this means for employers is that employees can take their money with them if they leave the company. Each year employer contributions are required so it’s important your company has a steady stream of income and cash flow. The final component to Safe Harbors are, in order to be effective by January 1, Safe Harbor provisions must be established by October 1.

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