The 401K Safe Harbor Provision Deadline is October 1st. It’s also the the last day to start a Simple Ira or a Safe Harbor Retirement plan for 2020.
If a 401(k) includes a Safe Harbor provision, the employer makes annual contributions on behalf of employees, and those contributions are vested immediately. A Safe Harbor 401(k) is a great way to reward your employees with higher retirement contributions. It also allows you to legally bypass costly plan testing and opens the doors for much higher contributions to owners and highly compensated employees. Safe Harbor 401(k) plans are the most popular type of 401(k) used by small businesses today. Unlike a traditional 401(k) plan, they automatically pass the ADP/ACP and top heavy nondiscrimination tests when mandatory contribution and participant disclosure requirements are met by March 6, 2019.
The maximum salary deferral amount that you can contribute in 2019 to a 401(k) is the lesser of 100% of pay or $19,000. However, some 401(k) plans may limit your contributions to a lesser amount, and in such cases, IRS rules may limit the contribution for highly compensated employees.
Your clients will benefit by tax savings, tax credits and streaming thier business through integration to save time and increase compliance.