Be on the lookout for Safe Harbor deadlines

Safe Harbor provisions in a 401(k) plan allow the plan to automatically pass non-discrimination testing (ADP, ACP and top heavy) and allow highly compensated employees (owners and other higher earners) to be able to maximize their salary deferrals to the IRS limits.? In order to have a safe harbor provision for a new plan, all participants must have at least 90 days of deferral opportunities.? Most plans have a 12/31 year-end - meaning all participants must be able to make an election for salary deferral contributions the first payroll in October.

Most 401k record keepers usually require a minimum of 4 weeks to allow for time to set up the plan, plan participant accounts, and provide other material necessary for a successful new plan launch.?? So, for new plans the window to have an orderly rollout with a safe harbor provision is rapidly shrinking.

With the amazing tax credits from SECURE 2.0 to offset most if not all start-up cost, talk to your Farmer & Betts consultant before this limited time opportunity sails away or click on this LINK to enter or upload a census securely for a retirement plan contribution illustration.