Safe Harbor Deadline is Quickly Approaching
by Joe Trybula, CFP®, AIF®
Diversified Financial Advisors, LLC
Joe Trybula, CFP®, AIF® with Printers 401K, will host the following webinar from 2-2:30 p.m. CST on Oct. 10:
- 401K Problems SOLVED, Oct. 10
Most plan sponsors are unaware of the many duties required of them as plan fiduciaries. It doesn’t have to be so complicated. By focusing on the right things, a plan sponsor does not have to know everything. Learn more.
End of year testing
A proactive check-up can prevent the unexpected costs of failed testing at year end and allow you to take action now to improve your results. Watch video.
Implement Your New Plan Design Before December 1st!
A Safe Harbor 401(k) Plan is a way to design your plan to automatically pass the non-discrimination tests or avoid them altogether, guaranteeing that highly compensated employees can make the maximum contribution for the plan year. For your plan to achieve Safe Harbor status, your employer is required to make contributions.
There are several ways a plan can satisfy the contributions requirements.
- Employer matches 100% of the first 3% of compensation, plus 50% on the next 2% of compensation or total of 4%.
- Employer matches 100% on the first 4% of compensation.
- Employer contributes 3% of compensation to all eligible employees.
- Employees are automatically enrolled into the plan either at 3% and escalated at 1% annually or 6% and the employer contributes 100% on the first 1% of compensation and 50% on the next 5% of compensation or total of 3.5%. This is called a Qualified Automatic Contribution Arrangement Safe Harbor Plan (QACA)
Contributions are immediately vested for standard safe harbor plans and there is an optional two year cliff schedule for a QACA Safe Harbor plan.
Existing plans are required to adopt the Safe Harbor plan provisions before the end of this year and provide advanced notification in order to have it in place for the beginning of next year.