Logo letter

A Brief Overview of Safe Harbor 401K Plans


Safe harbor 401K plans offer employers and their employees significant advantages when compared to traditional retirement 401K plans. Safe harbor plans are low cost 401K plans that are fast becoming the most popular type of retirement plan for small businesses. For a company's 401K plan to be meet the requirements of a safe harbor plan, the owners must make contributions on the behalf of their employees.


Immediately, it may make you wonder why safe harbor plans are so popular if employers are required to make a specific contribution? The reason is that 401K plans must pass specific required testing. With a safe harbor plan, it allows the organization offering the plan to automatically pass these tests, known as the Top Heavy and the ADP/ACP tests. By reducing annual testing requirements, employers can actually have an easier time with a safe harbor plan without paying additional fees. Check out for your best safe harbor 401k match.


Though all 401K plans allow employers to make contributions, the safe harbor model has certain specific requirements for employers to follow. In the safe harbor model the employer must match any employee's 3% contribution to the plan at a rate of 100%. After this, the employer is required to match the employee's next 2% contribution at a rate of at least 50%. Other safe harbor plans call for a 3% and 3% matching funds requirement. Employees benefit by having a certain amount of guaranteed employer contributions that they can count on, which is very helpful especially when an employee has reached a certain age and will be collecting their retirement soon.


Many employees, especially small business employees, are worried that they will not have enough saved up to retire. A safe harbor 401K plan allows the employee to save as much as they want per year, up to a certain dollar amount. This can help older employees who have just started saving to build up a significant amount by the time they retire. With a safe harbor 401K plan you can rest assured that your employer is matching your funds up to a specific amount.


If you are interested in learning more about the advantages of safe harbor 401K plans for small business, the best thing you can do is take a moment to visit the website of an erisa 3 38 investment manager or 3(38) investment manager. By looking online for a 3(38) fiduciary erisa or a 3 38 investment manager, you will be able to find out more about how you can implement a safe harbor 401K plan in your company. To get started, all you have to do is perform a search engine search for small business 401K providers or the best safe harbor 401K providers for small business.


Get more detailed information at http://www.ehow.com/how_5325850_good-financial-advisor.html.