Safe Harbor FAQ

The phrase “safe harbor” has many connotations in qualified retirement plans. However, when it is written as “Safe Harbor” it usually refers to an employer contribution to a 401(k) plan that removes some non discrimination testing requirements.

It’s a way to make sure that rank and file employees receive a certain minimum – 100% vested – benefit while allowing highly paid staff to defer the statutory maximum amount.

Sorry, no – it’s mandatory. The IRS has said that in order for the plan to benefit from the Safe Harbor provisions, the Notice must be distributed to each eligible participant at least 30 days before the start of the applicable plan year.

Hunter Benefits Consulting Group will create the Notice for you. You will be responsible for distributing it to your participants.

Yes. The specific fee will be in your individual Service Agreement.

At least 30 days before the start of the applicable plan year. In other words, the Safe Harbor notice for 2022 will be due in the participants’ hands no late than November 30, 2021.

There are 2 types. Some employers pick the 3% Safe Harbor Non Elective contribution. Each eligible participant receives a contribution equal to 3% of their compensation. The other choice is a match. The basic Safe Harbor Match is a 2-tier formula. It equals 100% of the first 3% of pay plus 50% of the next 2% of pay. Essential, a participant needs to defer at least 5% to receive the maximum 4% contribution.

Yes. A plan can have the 3% formula one year and the basic match formula the next. However, the plan must be amended each time a change is made.

We have the document information already and we will be contacting you directly with any questions that arise.

You will receive electronic notification and will be able to find your Notice in the portal.

We prepare and send a master copy of the Notice to you. It is your responsibility to print the Notice and distribute to all eligible participants. You are requested to provide us with verification of when the Notices were distributed.

That’s a 2 part answer. If you’re starting the 401(k) component for the first time, that part of the plan needs to be at least 3 months long. So, for a December year end plan, it needs to be up and running by October 1st. If you want Safe Harbor Match, it needs to be in place before the year starts. But, if you have a non-Safe Harbor 401(k) Plan that’s been around for at least 3 months, you can add the 3% Safe Harbor Non Elective contribution by November 1st of the year. And, if you miss that deadline, you can add a 4% Safe Harbor Non Elective by December 31 of the following year.