Safe Harbor 401k
Who can establish this Plan?
Any employer with one or more employees
When must the Plan be established?
By the end of the fiscal year-end (12/31 for calendar year)
Are employee contributions mandatory?
No. Employees can elect how much to defer pursuant to a salary reduction agreement. text.
Are employer contributions mandatory?
Yes. The employer must make a contribution in the form of a safe harbor basic match, a safe harbor enhanced match or a safe harbor non-elective contribution as elected in the Plan.
What are the employer contribution limits?
25% of participating compensation with the allocations limited to 100% of compensation or $56,000 per participant in 2019.
What are the employee contribution limits?
$19,000 in 2019. Participants over the age of 50 are eligible to make additional “catch-up” contributions (see FAQ).
What is the funding responsibility?
Either employee salary reduction contributions or employer contributions, or both.
When must contributions be made?
Employee contributions must be deposited as soon as administratively feasible, generally within 5 days after the payroll date (see Deferral Timing Notice). Employer contributions must be deposited by tax-filing date plus extensions..
What are the eligibility requirements?
The maximum allowable eligibility requirements that can be imposed are 21 years of age and 1,000 hours of service in 2 preceding years. The employer has the option of reducing these requirements.
What are the vesting requirements?
Employee salary deferrals are 100% vested. Safe harbor contributions also vest immediately. Additional employer contributions may vest over time, typically a graded schedule with full vesting after 6 years.
Is the Plan subject to non-discrimination testing?
No annual ADP test required. ACP may be required.
Is the Plan subject to top heavy minimums?
Yes. If 60% or more of the plan assets are allocated to Key employees, up to a 3% employer contribution is required.
When is an employee eligible to withdraw from the Plan?
Generally, salary deferrals cannot be withdrawn until separation of service, death, disability, or retirement. A plan may allow for hardship distributions.