Many businesses offer a variety of retirement benefits that could consist of: SIMPLE 401(k) plans, Traditional 401(k) plans, or the Safe Harbor 401(k) plans.
The Safe Harbor 401(k) plan is actually the most popular type of retirement plan for businesses with employees. It makes it easy for business owners to maximize their own accounts while reducing some of the limitations associated with adhering to IRS nondiscrimination testing. In other words: More saving, less hassle!
Time flies, and the next thing you know, it will be October! There must be a 3-month plan year for Safe Harbor 401(k) plan to be possible. As a result, a calendar year for the Safe Harbor 401(k) plan must be established October 1st this year, in order for them to receive an exemption from the ADP and ACP tests.
Employers who will sponsor Safe Harbor 401(k) plans must be able to satisfy the notice requirements. These notice requirements are satisfied if an eligible employee for the plan year is given a written notice of the employee’s rights and obligations under the said plan and the notice satisfies the content and timing requirements.
In addition, if the plan is designed correctly, the profit-sharing feature associated with the plan may be effective for the full 12-month plan year, which will allow the maximum total contribution to the plan!
With regards to the fast approaching deadline, it’s better to be aware with what the requirements are so that you are able to gather the information needed (just for you and your employer to take note)!
Know that accounts are open, and it takes 4-6 weeks for it to be fulfilled because a lot of things must be scheduled ahead of time; like enrollment meetings in which participants must be able to defer income by the first payroll in October.
Also keep in mind that everything must be done before the October 1st deadline, and not on the day itself.
Fun fact: Both the traditional and safe harbor plans are for employers of any size and can be combined with other retirement plans!
If you have any questions regarding the right retirement plan for you, contact us today!
Recent Comments