Safe Harbor 401(k) Plans Toolkit
Resources to assist retirement plans in understanding and complying with the safe harbor 401(k) plan rules. This Toolkit also provides links to standard clauses and standard documents containing model language.
Employers offering a 401(k) retirement savings plan to employees must not discriminate in favor of highly compensated employees ( www.practicallaw.com/9-501-8255) . Safe harbor 401(k) plans are a type of 401(k) plan that:
Do not have to satisfy the annual nondiscrimination tests under the Internal Revenue Code ( www.practicallaw.com/2-382-3555) (Code) that apply to traditional 401(k) plans if certain conditions are met.
Must provide for employer contributions to be fully vested when they are made.
Safe harbor 401(k) plans are also exempted from the top-heavy rules of Code Section 416 (26 U.S.C. § 416).
Contributions made by an employer to a safe harbor 401(k) plan can be either:
Employer matching contributions made only to employees who make elective deferral contributions.
Employer contributions made to all eligible employees (regardless of whether employees makes elective deferral contributions).
Employers that sponsor safe harbor 401(k) plans must also meet certain notice requirements that are satisfied if each eligible employee for the plan year is provided with written notice of the employee's rights and obligations under the plan and the notice satisfies certain content and timing requirements.
The Safe Harbor 401(k) Plans Toolkit provides many continuously maintained resources that can assist plan sponsors in understanding and complying with the safe harbor 401(k) plan rules.