401(k) Safe Harbor Plan Overview

A safe harbor 401(k) plan is similar to a traditional 401(k) plan, but it must meet specific requirements under the Internal Revenue Code. Employer contributions must be fully vested when made. These contributions may be employer matching contributions (received only by employees who choose to make deferral contributions), or they may be employer nonelective contributions (made on behalf of all eligible employees, regardless of whether the employees choose to make deferral contributions). For more information regarding the contribution requirements which must be met by a safe harbor 401(k) plan, click here.

The benefit of providing a safe harbor 401(k) plan is that the deferrals and safe harbor employer contributions are not subject to the complex annual nondiscrimination tests that apply to traditional 401(k) plans.

An employer which sponsors a safe harbor 401(k) plan other than a safe harbor plan having a 3% non-elective contribution arrangement on and after January 1, 2020, must satisfy a safe harbor notice requirement by providing each eligible employee with an annual written notice of the employee’s rights and obligations under the plan. For more information regarding the content and timing requirements of this 401(k) safe harbor notice, click here.