InSight

What Are the Benefits of a Safe Harbor 401(k) Plan?

Financial Planning Dentist

A safe harbor 401(k) plan is a retirement savings plan that has advantages for both employers and employees. Here’s why it’s a good choice:

  1. Easy Compliance: Safe harbor plans help employers by automatically passing certain annual tests. These tests, like the ADP and ACP tests, ensure fairness in the plan and prevent favoritism toward business owners and highly paid employees. Failing these tests can be expensive, so passing them without worry is a big plus.
  2. Encouraging Savings: To meet safe harbor standards, employers need to make contributions to their employees’ accounts. This serves as an incentive for more employees to join the plan and rewards them for saving.
  3. Flexibility in Contributions: Employers have options in how they contribute. There are two plan types: traditional safe harbor plans with specific contribution formulas and immediate vesting, and QACA safe harbor plans with slightly lower matching contributions and shorter vesting schedules. Both types offer different contribution formulas, so you can tailor it to your needs.

If you’re interested in setting up a safe harbor plan, contact InSight.

More related articles:

Account Types: Taxable or Brokerage

The “Typical” Account  Annual Contribution Max: None Why we like Taxable or Brokerage: Can hold any marketed securities and assets Easy to set up and administer Benefits are universal and hold no limits on assets Can be used to house capital gain indefinitely (great for legacy planning or gifting) Can

Read More »
Dental Financial Planning
Articles
Kevin Taylor

Balancing Income and Taxation in Your Dental Financial Planning

As business owners we understand the struggle to balance income and taxation this is a major element in Dental Financial Planning. How much income should be on payroll as salary versus distribution? What benefits can be pre-tax? How can I pay less taxes and avoid an audit? How much should

Read More »
Articles
Kevin Taylor

Why we rebalance?

“Rebalancing is both risk management and capital growth” In this Article: the effect of our recent rebalancing a view of our process in action the result of active risk mitigation Overview Our rebalancing process is an important discipline we maintain in good times and bad. It helps us trim positions

Read More »

Pin It on Pinterest