Safe Harbor Guide
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Safe Harbor
A plan option that can help business owners maximize savings and pass compliance testing.
What is a Safe Harbor?
Safe Harbor is a type of employer contribution that can be added to a 401(k) plan to help the plan pass compliance testing. A 401(k) Safe Harbor can boost participation in your retirement plan enabling owners and highly compensated employees to contribute more money to their own retirement account.
How Safe Harbor Works
Safe Harbor is a type of employer contribution that is added to a 401(k) plan to help business owners and highly compensated employees save more for retirement while helping the plan pass compliance testing. There are three types of contributions an employer can choose from: non-elective, basic match, and enhanced match.
Why Safe Harbor is Important
Adding a Safe Harbor provision to your 401(k) plan allows the plan to pass compliance testing. This means highly compensated employees can maximize their annual personal contributions. And if you choose a Safe Harbor match, you’re incentivizing enrolled employees to increase their retirement savings themselves.
How Fisher Can Help
Fisher is one of America’s top advisory firms with deep experience helping business owners navigate the ins and outs of evaluating and setting up a Safe Harbor strategy tailored to meet their specific objectives.
MUST-SEE 2-MINUTE VIDEO
Safe Harbor Video
Watch this short video to learn how successful business owners can leverage a Safe Harbor 401(k) to increase retirement savings for themselves and highly compensated employees, maximize tax advantages, and pass annual compliance testing. Plus, it can help employees save more for their own retirement.
| Visual | Audio |
|---|---|
| [Upbeat music] | What is a Safe Harbor Plan Fisher Investments® 401(k) Solutions |
| [The volume of the music is reduced] Male Voice: Safe Harbor 401(k) plan is essentially a 401(k) plan with a Safe Harbor provision. Which essentially means that an employer can make a contribution on behalf of the employees to pass compliance testing. | A man dressed in a suit speaks to the camera. A flyout in the lower left corner identifies him as Michael Gaddi, Business Development Executive. |
| So, there are three types of Safe Harbor contributions. First being three percent non-elective. Second being basic match and lastly enhanced match. So the reasons this matters and why it’s a great option for some businesses is because often times people aren’t aware of the limitations that can be created for certain employees and how they can contribute to the plan. Right, some aren’t able to maximize the benefits or the tax advantages including the owner. So, with a Safe Harbor as long as any one of those three contributions are made on behalf of the employees the plan automatically passes most annual compliance tests. Now all the highly compensated employees, as well as the owner, can maximize their contributions and the business owner as well can maximize their contributions and tax advantages for the business. | The camera zooms in as the man continues to speak. |
| It’s important for a business owner to have the ability to maximize their personal contributions into the retirement plan. Because that’s what is going to allow them to maximize the full tax benefits within the retirement program. | The camera zooms back out. |
| Safe Harbor is a great option for business owners who aren’t currently able to maximize the tax advantages and benefits due to annual compliance testing. Also, you know any business that runs into corrective distributions also a great option. | The camera zooms back in. |
| At Fisher Investments, we have the knowledge and expertise to guide our clients through all the many options when it comes to creating a 401(k) program. When you do better, we do better. | The camera zooms back out. |
| The volume of the upbeat music increases. | Fisher Investments 401(k) Solutions. © 2022 Fisher Investments. Investing in securities involves the risk of loss. Intended for use by employers considering or sponsoring retirement; not for personal use by plan participants. |
| Music fades out. | Screen fades to black. |
Safe Harbor Guide
Find out what business owners need to know about adding a Safe Harbor to their 401(k) plan:
- Learn how a Safe Harbor 401(k) works
- Consider when a Safe Harbor makes sense
- Review Safe Harbor scenarios
There are Three Options for Safe Harbor Contributions
Non-Elective Safe Harbor
Eligible employees get an annual employer contribution of 3% of their salary. This amount is immediately fully vested and the employee gets it whether or not they contribute to the plan.
Basic Safe Harbor Match
The employer matches 100% of the first 3% of each employee’s contribution and 50% of the next 2%. Employees are required to contribute to their 401(k) in order to get the match.
Enhanced Safe Harbor Match
The employer matches 100% of the first 4% of each employee’s contribution. Like a Basic Safe Harbor Match, employees are required to defer money to their 401(k) in order to qualify for the match.
Safe Harbor Case Study
Consider how highly compensated employees can maximize their 401(k) contributions.
- Run the numbers for three principals at a law firm.
- See how much this one change increases their 401(k) savings.
- Find out if you’re a good fit for a Safe Harbor 401(k).
Contact Us
One of our 401(k) business specialists would love to talk to you about your company’s retirement plan needs.
Call Us
(877) 626-0277
