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.

Sample 401k Safe Harbor Contribution Notice - Summary: This is a sample contribution notice. Located at: Keller Benefit Services , October 2009. Click on headline for full article.

Safe Harbor 401k Chart - Summary: This chart covers some of the basics that an employer needs to know before considering a 401k Safe Harbor Plan. Each employer's goals, plan design, contribution sources and demographics form a unique scenario which the employer will wish to discuss with his or her plan provider before finalizing the decision to make the plan a 401k Safe Harbor Plan. Located at: McKay Hochman, June 2009. Click on headline for full article.

Good News for Many Safe Harbor 401k Plans - 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. Located at: Mitchell, Williams, Selig, Gates & Woodyard , May 2009. Click on headline for full article.

Cutting a Safe Harbor Plan Match - Summary: It seems that every day a few more companies are reducing or eliminating their 401k match. For those companies who were maintaining safe harbor plans, this causes some surprising complexities. In this article discusses the traps and pitfalls. Located at: JP Morgan, April 2009. Click on headline for full article.

Detailed Information on Safe Harbor Contributions to 401k Plans - 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. Located at: Lincoln Financial Group , May 2009. Click on headline for full article.

Retirement Plan Comparison Chart - Revised and Updated - 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. Located at: 401khelpcenter.com, January 2008. Click on headline for full article.

Eliminating Safe Harbor Match After Notice is Distributed - 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. Located at: 401khelpcenter.com, December 2008. Click on headline for full article.

Safe Harbor 401k Plans: When Are They Exempt from Top Heavy? - Summary: In Revenue Ruling 2004-13, the IRS explains the exemption from the "top heavy" rules for a plan that consists solely of a safe harbor 401k arrangement. Located on: Reish Luftman Reicher & Cohen, March 2004. Click on headline for full article.

Our 401k Safe Harbor Just Got Bigger - Summary: For those of you who have been thinking about adopting a safe harbor design for your company’s 401k plan but have not yet jumped on board or set sail, the IRS has issued additional guidance in the form of Notice 2000-3, which may just convince you to drop anchor in the safer and simpler waters of a 401k safe harbor design. Located on: Chang Ruthenberg and Long PC, January 2004. Click on headline for full article.

Limiting Compensation for HCEs in Safe Harbor Plans - Summary: Can a safe harbor match 401k plan limit the compensation only for HCE salespersons? Located on: Reish Luftman Reicher & Cohen, March 2004. Click on headline for full article.

IRS Notice 2000-3 on Safe Harbor 401k Plans - 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. Click on headline for full article.

IRS Notice 98-52 on Safe Harbor 401k Plans - 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. Click on headline for full article.

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