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...

Plan Design A  safe harbor 401(k) plan  helps small businesses automatically pass annual nondiscrimination tests—avoiding costly issues like  ADP/ACP test  refunds or  top heavy  contributions. But not all safe harbor plans are created equal. Safe harbor 401(k) plans come in two basic types today - traditional and Qualified Automatic Contribution Arrangement (QACA) . Both can automatically satisfy IRS nondiscrimination testing but differ in how they approach employee participation, employer contributions, and administrative requirements. Let’s break down how traditional and QACA safe harbor plans compare—and how recent retirement plan legislation like  SECURE 1.0  and  SECURE 2.0  might impact your decision when choosing the best safe harbor plan for your business. What Is a Traditional Safe Harbor 401(k) Plan? A traditional safe harbor 401(k) plan requires employers to make one of the following contributions to eligible employees: Basi...

The  SECURE 2.0 Act of 2022 (SECURE 2.0) introduced  major changes to 401(k) plans, especially for small businesses. Three major changes take effect for plan years beginning after December 31, 2024 (January 1, 2025 for a calendar-based plan). They relate to automatic enrollment, long-term part-time eligibility, and catch-up contributions. As a small business owner, it’s crucial to understand the changes to ensure your 401(k) plan is compliant. Below we break down the SECURE 2.0 changes that will affect 401(k) plans for 2025, including practical steps to meet their requirements. If you need further assistance, contact your 401(k) provider. Automatic Enrollment in New Plans Automatic enrollment  is a 401(k) plan feature that automatically enrolls eligible employees at a preset default contribution rate, unless they actively opt out . The feature aims to simplify participation and increase retirement savings rates among employees. What’s New for 2025 SECURE 2.0 requires new ...