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The Safe Harbor 401(k) Deadline Is Quickly Approaching

The Safe Harbor 401(k) Deadline Is Quickly Approaching

| September 10, 2018

The Safe Harbor 401(k) Deadline Is Quickly Approaching

Now is the time for small business owners to act.


Provided by Nick A Weber, CFP®, AIF®, CRPS®


October 1 is the deadline for companies to set up Safe Harbor 401(k) plans for 2018. If you want to put one in place at your business, you need to give your employees notice at least 30 days in advance – so that means you must act fast. You must set up the plan by August 30, and notify your workers by September 1.1,2


Why do small businesses start Safe Harbor 401(k)s? In a nutshell, they want a retirement plan that rewards top talent, a plan that is exempt from yearly non-discrimination testing, and a plan that encourages more employees to participate with the help of mandatory matching or non-elective employer contributions.2


A Safe Harbor 401(k) provides a great way to show your top talent how much you value them. Together, an employee and an employer may contribute a) up to $55,000 or b) up to 100% of the employee’s annual compensation per year to a Safe Harbor 401(k) account, whichever is lesser. If you have a key employee who needs to save much more for retirement, a Safe Harbor 401(k) plan has great merit.3


How does a company make contributions to a Safe Harbor 401(k)? A business has two matching contribution options. It can either match a) 100% of each employee’s 401(k) contributions, up to 3% of their compensation, and then match 50% of the next 2% of their compensation, or it can match b) at least 100% of each employee’s contributions, up to 4% of their compensation (optionally, an employer can provide a 100% match of up to 6% of compensation). Either way, workers must contribute to their Safe Harbor 401(k) accounts to obtain the employer match.2


Alternately, a business with a Safe Harbor 401(k) can make non-elective account contributions of at least 3% of each employee’s compensation whether the employee contributes or not.2


Your company is entitled to a tax deduction for its contributions. All employer contributions to a Safe Harbor 401(k) vest immediately – that is, your workers own 100% of the money you contribute to their accounts as soon as you contribute it.2,3

So, act fast to meet the coming deadlines. If you want a retirement plan free of those bothersome, annual non-discrimination tests, then choose a plan that gives your business “safe harbor” from them, while allowing you to help your employees save consistently for their retirements. Ask about putting a Safe Harbor 401(k) plan into place at your firm.

Nick A Weber, CFP®, AIF®, CRPS® may be reached at (916)932-4101 ext 4, or via email at:


This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.


Nick A Weber, CFP®, AIF®, CRPS®, is licensed to sell securities in CA, NV, AZ, CO, FL, and NM. The Investment Fiduciary standard of care applies to advisory services only. Securities offered through Securities America, Inc., member FINRA/SIPC. Nick A. Weber, Registered Representative. Advisory services offered through Securities America Advisors, Inc. Iron Point Financial Advisors, Inc., and the Securities America Companies are separate entities.,



1 - [7/3/18]

2 - [4/26/18]

3 - [2018]