Compliance Stuff

Plan Design Is your small business overwhelmed by annual 401(k) nondiscrimination testing ? A  safe harbor 401(k) plan  can automatically satisfy the  ADP/ACP  and  top-heavy  nondiscrimination tests when certain employer contribution and participant notice requirements are met. That means no corrective refunds to Highly Compensated Employees (HCEs) , no surprise top heavy minimum contributions, and more predictable budgeting—all while giving you an edge in recruiting talent. We get a lot of questions from small business owners about safe harbor 401(k) plans. Here are answers to the most important questions we receive. They reflect changes made by the  SECURE Act of 2019 (SECURE 1.0 ) and  SECURE Act of 2022 (SECURE 2.0). What Makes a 401(k) Plan “Safe Harbor”? To achieve safe harbor status, a 401(k) plan must meet the following requirements: Mandatory Employer Contributions:   Employer must provide employees with either a matching or nonele...

If you're a small business owner in a  state with a retirement plan mandate , choosing between a state-run program and a private 401(k) is more than checking a legal box—it’s a strategic decision that can influence your company’s bottom line, your employees’ long-term financial security, and your ability to attract and retain top talent. With more than half of private-sector workers now participating in 401(k) plans—and with small employers increasingly looking for ways to differentiate themselves—offering the right retirement plan can give your business a meaningful competitive edge. State-mandated retirement programs are designed to expand access to retirement savings with minimal employer burden. They’re simple and cost-free for employers, but also limited—often capping contributions, restricting investment choices, and lacking flexible features. In contrast, a private 401(k) plan offers greater versatility: higher contribution limits, broader investment options, customizable ...

Contributions Employers can contribute to their employees’ 401(k) accounts in two main ways:  matching contributions  and nonelective contributions. Matching contributions are tied to employee deferrals—employers contribute only when employees do. In contrast, nonelective contributions are made to eligible employees regardless of whether they contribute to the plan themselves. Understanding nonelective contributions is critical for both employers and employees. For employers, they offer flexible tools to meet plan goals—whether avoiding annual testing, maximizing owner contributions, rewarding employees, or fixing compliance issues. For employees, they can mean guaranteed retirement savings even without personal deferrals. This guide breaks down the three major types of nonelective contributions—safe harbor, profit sharing, and corrective (QNECs)—and when each may be appropriate. What Are 401(k) Nonelective Contributions? Nonelective contributions are employer contributions ma...