A variation of the conventional 401(k) plan, the 401(k) Safe Harbor Plan allows plan sponsors to fundamentally "buy" their way out of the Actual Deferred Percentage (ADP) and Actual Contribution Percentage (ACP) tests. In certain cases, a "Safe Harbor" contribution also satisfies the minimum contribution requirement for plans that are or might be expected to become "top-heavy".

A 401(k) safe harbor plan is a 401(k) plan that automatically satisfies the nondiscrimination rules for elective deferrals and matching contributions. For a 401(k) plan to be considered a safe harbor plan, employers must satisfy certain contribution, vesting, and notice requirements.

A safe harbor plan design offers an employer many advantages. As long as the plan operates within guidelines, a safe harbor 401(k) plan is deemed to pass ADP/ACP nondiscrimination tests and is deemed to not be top heavy. This allows the highly compensated employees to defer greater dollar amounts in plans with lower participation level.

Safe harbor 401 (k) plans have specific employer contributions so the employer has less flexibility than available in a traditional 401(k) plan. All employer safe harbor contributions are always 100% vested. In-service withdrawal restrictions apply to safe harbor contributions. An annual safe harbor notice is required to be distributed by the employer to all eligible participants.

Under a safe harbor 401(k) plan, an employer can provide either a safe harbor non-elective contribution of at least 3% of compensation or a safe harbor matching contribution. The safe harbor matching contribution can be a dollar-for-dollar match on elective deferrals up to 4% of compensation or a dollar-for-dollar match on elective deferrals up to 3% of compensation and a 50 cents-on-the-dollar match on elective deferrals between 3% and 5% of compensation.

Safe harbor matching and safe harbor non-elective contributions are always 100% vested. Regular matching and discretionary profit sharing contributions can be subject to vesting schedule within a safe harbor plan.

Both plan designs provide the employer protection from top heavy rules as long as the employer makes the employer contributions required under these plan designs. SIMPLE 401(k) plans are exempt from top heavy rules. Safe harbor 401(k) plans are deemed to not be top heavy if operated within certain parameters. If the employer makes employer contributions in addition to the safe harbor contribution, the plan may not be deemed to not be top heavy for that given plan year.

A 401(k) plan is a defined contribution plan that is a cash or deferred arrangement. You can elect to defer receiving a portion of your salary which is instead contributed on your behalf, before taxes, to the 401(k) plan. Sometimes the employer may match your contributions. There are special rules governing the operation of a 401(k) plan. For example, there is a dollar limit on the amount you may elect to defer each year. The dollar limit is $11,000.

employer should have a written investment policy in place. The employer should determine investment options that are consistent with that policy, hire investment personnel to effectuate and monitor the investments and provide information to employees regarding the 401k investments.

Safe Harbor is a 90-bed shelter in South San Francisco. In its clean and safe environment, men and women are offered job services, substance abuse counseling and other services. The goal is to assist the homeless in rebuilding their lives, achieving self-sufficiency and reestablishing family relationships.

A 401(k) is a fairly simple plan. It is set up by your employer as a set contribution retirement agreement. That means you are the one who pays into the plan, although your employer and the plan provider who offers your 401(k) do just about all the work. Your 401(k) contribution is automatically deducted from your paycheck each pay period. This money is taken out and invested before your paycheck is taxed.

Participants in a 401(k) plan generally have a decent number of different investment options, nearly all cases a menu of mutual funds. These funds usually include a money market, bond funds of varying maturities (short, intermediate, long term), company stock, mutual fund, US Series EE Savings Bonds, and others.

Your 401(k) plan helps you start regular investing, and stick with it. Your contributions are automatically deducted from your salary before you receive your check. Since the money is deducted from your gross income, you will have a lower taxable income, which means you will pay less in annual taxes. The money you save will accumulate on a tax-deferred basis. This means you pay no federal or state taxes on your contributions or investment earnings until you start withdrawing money from the plan.

long as your 401(k) balance is greater than $2,000, you can take up to 50% of your account balance for purposes of a loan (minimum loan amount is $1,000). There is a $75 loan origination fee and the loan is paid back through payroll deductions (the interest charged is prime plus 2%). Participants are also charged a $50 annual loan fee. Loan requests are made through the Great West Life Annuity and generally take about 2-3 weeks to process all the necessary paperwork.

For Employees: 401(k) plans are popular with employees because they are able to divert a portion of their salary into an account that is set aside for their retirement while simultaneously reducing their current tax bill. Employees are not required to pay income tax on these salary deferrals until they take the money out of the 401(k) plan, at some time in the future.