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  • Writer's pictureSamantha Diggs

The Business Owner’s Guide to Safe Harbor 401k Matching Policies

As one of RPCSI’s most popular choices of retirement plans, the Safe Harbor 401(k) ensures equal contributions to every company employee regardless of position status. Safe Harbor is great for owners and employees alike. While Safe Harbor 401(k) plans enable employers to provide great retirement benefits to employees while also saving certain cost rates, few businesses realize how Safe Harbor 401(k) matching policies offer more valuable benefits and savings options than the traditional 401(k) allows. So, what are the different types of Safe Harbor 401(k) matching policies? Let’s review these policies and how they work below.




Types of Safe Harbor 401(k) Matching Policies

While most Safe Harbor 401(k) plans must immediately vest 100% contributions to contributing members, there are certain types of features that have employers match employee deferrals. Let’s briefly review the following Safe Harbor 401(k) matching policies businesses can offer as retirement plans:


Basic Match: Through the basic Safe Harbor 401(k), employers end up matching 100% on all employee salary deferrals up to the first 3%, then 50% of the next 2% of elective deferral for their income so long as members contribute. This type of contribution requires immediate vesting.

Enhanced Match: With an enhanced Safe Harbor 401(k), employers give 100% or more matching contributions on the first 4-6% of elective deferrals for each employee member that continues to contribute. This type of contribution requires immediate vesting.

QACA Match: Employers likewise give 100% matching contributions to Quantified Automated Enrollment Arrangement (QACA) Safe Harbor 401(k) plans for the first 1% of elective deferrals, followed by 50% on the next 5% of their income as long as they remain contributors to said plan. This type of contribution allows for a 2 year cliff vesting schedule.




Benefits of Safe Harbor 401(k) Matching Plans

Like most Safe Harbor plans, Safe Harbor 401(k) Matching policies eliminate the need for annual Actual Deferral Percentage, Actual Contribution Percentage, or other top heavy tests, allowing high-paid employees to defer the maximum contributions while ensuring your company passes required non-discrimination testing. Furthermore, as employers must match contributions of members, employees can opt to defer up to the maximum generating significant retirement savings for the future.



Set Up Your Safe Harbor 401(k) Matching Plans with RPCSI

No matter which Safe Harbor 401(k) Matching plan you choose, each plan must be submitted by October 1st to qualify for implementation as outline here, or if at a later date and increase employer contribution is required for the first year. Furthermore, every Safe Harbor 401(k) plan must apply provisions before the 1st day of any plan year with a 30-day notice sent to company members, which may be excused under certain SECURE Act exceptions. For employers or sponsors curious about applying Safe Harbor 401(k) Matching plans into their business structure, let RPCSI help! Through our expert planners, RPCSI offers professional consultation to help customize the perfect retirement plan structure for your organization. To learn more about our services or schedule a consult with one of our members, contact RPCSI today.




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