![]() ![]() In an attempt to hit the maximum amount allowed per year, many business owners surpass the contribution limit on their plan without realizing it. These limits are typically based on ADP and ACP testing and top-heavy testing. Traditional 401(k)’s place certain limits on business owners in terms of how much money they are able to contribute to the plan. It is important for business owners to also remember that matching contributions act as a great recruiting tool for prospective hires and can aid in retention of existing employees. At tax time, your company can also deduct matching contributions to employee accounts within the deductibility limits set by the IRS. With a safe harbor plan, you have the opportunity to contribute the annual maximum deferral amount to your own 401(k) plan while also receiving extra savings from your business’s matching contributions. Safe harbor plans allow business owners to maximize their contributions to their own accounts while also reducing many of the limitations that go hand-in-hand with IRS non-discrimination testing. Safe harbor plans can be highly attractive to businesses as they come without the risk of refunds. Safe harbor 401(k) plans are one of the most popular types of 401(k) plans used by small businesses today. When business owners choose to participate, the Internal Revenue Service (IRS) provides business owners “safe harbor” from the non-discrimination testing process and the consequences of 401(k) testing fails. This plan has certain features that help employees save money by requiring companies to contribute to their workers’ 401(k) plans. What is a Safe Harbor Plan?Ī safe harbor plan is a type of 401(k) retirement plan that is exempt from non-discrimination testing. Learn more about safe harbor plans, how they compare to traditional 401(k) retirement plans, and why business owners should consult with experienced financial consultants before acquiring any type of retirement plan for their employees. Safe harbor plans are similar to 401(k) plans but have some distinct differences. While many people are familiar with traditional 401(k) plans, safe harbor plans are not as widespread. However, not all retirement plans are the same. Retirement plans are an attractive incentive for job candidates and employees. ![]()
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |