Safe Harbor 401(k) Plans

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July 7, 2017
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Safe Harbor 401(k) Plans

 
If you are a small business owner interested in a 401(k) plan, you need to consider the advantages of a safe harbor 401(k) plan.
These plans allow the key employees to contribute up to the maximum dollar limit of $18,000 for 2017 as their 401(k) elective deferral without regard to what the other employees contribute. The maximum deferral for 2017 is $24,000 if a participant is age 50 or over.
In a traditional plan, the highly compensated employee’s contribution may be limited and is dependent upon what all other employees contribute as elective deferrals to the plan. One method of meeting the safe harbor rules is to make a 3% fully vested contribution for all employees. The end result can be a very appealing plan.
 

 

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