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• Simplified
Employee Pension (SEP)
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Simple IRA
•
Profit Sharing
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Age-weighted/comparablility profit
sharing plans
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401(k) profit sharing
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Safe-harbor 401(k)
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Owner only/one-person 401(k)
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Defined benefit pension |
401(k) Safe-harbor Plans
A safe-harbor 401(k) plan is not subject to non-discrimination tests,
therefore all employees have the opportunity to maximize deferrals.
Eligibility
Employee eligibility requirements are the same as those for a 401(k)
profit sharing plan.
Contributions
Contribution types and limits are the same as those for a 401(k) profit
sharing plan, with a “safe-harbor” exception. To qualify
for the exception, the employer must make a 100% vested contribution
of either:
• 3% of compensation for each
eligible employee or
• A matching contribution of up
to 4% of compensation.
The safe harbor then permits the owner and other highly compensated
employees to defer the maximum without regard to the deferral levels
of the non-highly compensated employees.
Advantages
In addition to the advantages offered by a 401(k) profit sharing plan,
the safe-harbor 401(k) avoids the non–discrimination testing
that may limit the amounts the highly compensated employees may defer.
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