Safe Harbor 401(k)s are designed to allow owners and highly compensated employees (generally owners and those making over $120,000) to contribute up to the maximum dollar limit as their 401(k) elective deferral without regard to what other employees contribute. The maximum deferral
for 2019 is $25,000 if a participant is age 50 or over.
Safe Harbor 401(k) Solution vs Traditional 401(k)
Allows the owner and other highly paid
employees to contribute the maximum
deferral allowed by law no matter how
much (or how little) the other employees
contribute.
Traditional 401(k) plans are required
to ensure that all employees are treated
equally under the plan, regardless of the
pay level.
Highly compensated employees’
contributions may be limited dependent
upon what all other employees contribute
as elective deferrals to the plan under the
annual ADP/ACP test.
A Safe Harbor 401(k) will be deemed
to have automatically met the top heavy
requirements regardless of the percentage
of the plan assets in the key empoyees’
accounts.
When the balances of the key employees
of the company are at least 60% of the
total plan assets, the plan is considered top
heavy.
If key employees continue to contribute
salary deferrals to the plan, the company
is required by law to make a contribution
of at least 3% of pay to all other employees
in the plan. This is very likely to occur in
a small company’s 401(k) plan since key
employees are likely to make the largest
contribution to the plan.
A safe harbor plan solves these 401(k) plan problems often encountered by a small employer making it a very attractive plan for the small business owner.
MKG Enterprises Corp. dba MKG Insurance Agency
California Dept. Insurance License 0J03013
Florida Agency License No. L103183
Texas Department of Insurance License No. 2126837
New Mexico Partnership Corporation License No. 100014763
4021 N Fresno Street #107| Fresno, CA 93726
(559) 293-4977 direct | (866) 675-3933 ext 5| (609) 756-3766 fax
Life, Health, Auto, Home, Accident, Disability, Critical Illness, Medicare Advantage
Auto, Home, Life, Health, Pension & Annuities
https://mkginsuranceagency.com