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SAFE HARBOR 401(k) |
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Type of Business |
¨
Employees help fund retirement savings ¨
Employer willing to make contributions ¨
Employer incurs costs for administration |
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Features and Advantages |
¨
Employer must make a matching or non-elective contribution
of 3-4% ¨
Employees make pre-tax salary deferrals ¨
No discrimination testing required |
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Administration |
415 testing, top-heavy testing, and IRSS 5500 reporting |
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Establishment |
Prior to pay period in which the salary deferrals take
place |
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Eligibility |
Full-time employees age 21 and over with one year of
service |
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Vesting |
100%
Immediate |
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Annual Compensation Limit |
$200,000 |
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Maximum Employee Contributions |
The
lesser of 25% of compensation or $11,000 |
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Maximum Employer Contributions |
¨
Combined employer and employee contributions cannot exceed
the lesser of 25% of compensation or $40,000 |
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Mandatory Minimum Distributions |
¨
Begin by age 70 ½ ¨
Taxed as ordinary income |
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Distributions Before Age 59 1/2 |
10 % penalty in addition to ordinary income taxes for
distributions (Exceptions may apply) |
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Distributions After Age 59 1/2 |
¨
Pre-tax contributions and earnings are taxed as ordinary
income unless rolled over to another plan or an IRA if participant is not
working ¨
If participant is still working, plan must allow for
hardship withdrawals to access money |
Loans
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Permitted |