COLLECTED WISDOM™ on Safe Harbor 401k Retirement Plans
As a general rule, 401k plan must satisfy certain non-discrimination requirements. Many small businesses find this hard to do and, as a result, many don't set-up such plans. The Small Business Job Protection Act of 1996 provided 401k plans with alternative, simplified methods of meeting the non-discrimination requirements. 401k plans that adopt one of these alternative methods are referred to as "safe harbor 401k" plans.
Here is information to help you understand Safe Harbor 401k plans.
Summary: How does a plan correct the elective deferrals for an employee who is improperly excluded from a safe harbor 401k plan? And other correction methods for a safe harbor 401k plan.
Source: Relius.net, January 2013
Summary: If your plan provides for one of the safe harbor it is important to ensure that all the related requirements are met to achieve safe harbor status. This article and chart outline the key requirements for each of the safe harbor alternatives. In addition, listed below are some important safe harbor plan watch outs.
Source: ING Qualified Plan Consulting 
, December 2012
Summary: The IRS has recently put the use of forfeitures in a safe harbor 401k plan into doubt. This article provides background on the issue, discusses the latest IRS position, and explores options for plan sponsors.
Source: Sungard/Relius, October 2011.
Summary: Since the inception of the safe harbor 401k plans in 1999, safe harbor 401k plans have evolved into one of the most popular 401k plan designs. The obvious advantage of the safe harbor 401k plan is the ability to avoid the ADP and ACP tests. This FAQ address several of the questions practitioners frequently encounter in designing safe harbor 401k plans.
Source: Sungard/Relius, August 2011.
Summary: A safe harbor 401k cross-tested plan combines two of the most attractive defined contribution plan designs. The plan design provides (1) enhanced disparity; (2) flexibility; and (3) catch-up contribution potential. Understanding how the safe harbor and cross tested rules interact is essential in designing the combined plan. In this article discusses some of the important issues which affect the plan design.
Source: Sungard/Relius, July 2010.
Summary: A plan which utilizes the nonelective safe harbor contribution (typically a 3% fully vested contribution to all eligible employees) was not permitted to suspend the 3% contribution during the year without terminating the plan. Fortunately the IRS published proposed amendments to certain Treasury Regulations to provide an employer incurring a "substantial business hardship" an alternative to terminating the 401k safe harbor plan.
Source: Mitchell, Williams, Selig, Gates & Woodyard , May 2009.
Summary: A plan sponsor may elect to contribute safe harbor minimum contributions to a 401k and thereby avoid Actual Deferral Percentage (ADP) testing of elective deferral and Roth elective deferral contributions and/or Average Contribution Percentage (ACP) testing of employer matching contributions. This is a seven page detailed overview on Safe Harbor 401k plans.
Source: Lincoln Financial Group , May 2009.
Summary: Popular retirement plan aid that contrasts and compares the features of the following define contribution plans: 401k, Solo 401k, Safe Harbor 401k, SIMPLE 401k, Profit Sharing, SEP IRA, and SIMPLE IRA.
Source: 401khelpcenter.com, January 2008.
Summary: Treas. Reg. 1.401(k)-3(g) and Treas. Reg. 1.401(m)-3(h) permits a safe harbor matching contribution to be changed or eliminated after the safe harbor notice has been distributed.
Source: 401khelpcenter.com, December 2008.
Summary: This notice provides additional guidance regarding 401k plans that are intended to satisfy the 401k safe harbors. This guidance responds to comments and suggestions regarding ways to make it easier for employers both to adopt and to administer 401k safe harbor plans.
Located on: 401khelpcenter.com, December 2003.
Summary: This notice provides guidance on the design-based alternative or "safe harbor" methods in section 401k(12) and section 401(m)(11) of the Internal Revenue Code for satisfying the section 401k and section 401(m) nondiscrimination tests.
Located on: 401khelpcenter.com, December 2003.
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