Safe Harbor 401(k) Plans – More Savings, Less Hassle

The Safe Harbor plan is our most popular 401(k) retirement plan for businesses with employees. Safe Harbor plans make it easy for business owners to maximize contributions to their own accounts while reducing some of the limitations associated with adhering to IRS non-discrimination testing.

The Safe Harbor plan allows you to:

  • Contribute the maximum annual deferral amount ($19,000) to your own 401(k) plan
  • Receive additional savings from your company's matching contributions (you're an "employee" too)
  • Avoid the hassles of IRS non-discrimination testing
safe harbor

Get Tax Deductions for Your Matching Contributions

More good news: come tax time, your business can deduct all matching contributions (within the deductibility limitations imposed by the IRS) to employee accounts. And don't forget, matching contributions help increase employee retention, and are a great recruiting tool for prospective hires.

Automatically Satisfy IRS Testing

All 401(k) plans except Solo 401(k)s are subject to government tests to help ensure the plan is serving the best interest of employees and not just high earners. A Safe Harbor plan allows you to automatically satisfy non-discrimination testing by providing an immediately vesting match. Companies that choose a Safe Harbor plan must either:


  • Make a dollar-for-dollar matching contribution for all participating employees on the first 4% of each employee's compensation (this is the most popular option), OR
  • Contribute 3% of the employee's compensation for each eligible employee, regardless of whether the employee chooses to participate in the plan.

Safe Harbor plans work particularly well for companies that have consistent streams of revenue. Businesses finding it difficult to maintain matching funds year-round might find that a 401(k) plan without Safe Harbor could make more sense.

Frequently Asked Questions