Harless Tax Blog
Just a quick reminder that the deadline for setting up new 401(K) Plans with the Safe Harbor provision is quickly approaching. All new Safe Harbor plans for 2015 must be in place by October 1, 2015.
The Safe Harbor 401 (K) plan is one of the most popular retirement plans that business can have. Safe Harbor 401 (K) plan makes it easy for small and entrepreneurial business owners to maximize contributions to their own accounts while keeping employee costs manageable. You have until October 1 to establish a new Safe Harbor 401 Plan for calendar year 2015.
The Safe Harbor Plan 401 (K) plan allows owners to:
- Contribute the maximum annual deferral amount to their own 401 (K) plan ($18,000 or $24,000 if age 50+)
- Receive additional Safe Harbor contributions (they are an employee too!)
- Reduce the challenges associated with the 401 (K) non-discriminating testing
The Safe Harbor 401 (K) Plan makes contributions in one of the following two basic formulas or numerous variations:
- Non-Elective - Contribute 3% of compensation to all eligible employees
- Basic Match - Match 100% of the first 3% plus 50% of the next 2% of compensation.