Now I'm really confused. I thought the two things that a company could do to start a safe harbor 401k was to either offer 100% dollar for dollar match on the first 4% of each employee's total yearly compensation that the employee chooses to invest themselves or put 3% of each employee's yearly compensation directly into that employee's 401k plan whether or not the employee makes a voluntary contribution themselves, as long as all money in the plan was 100% vested from day one.

It seems that your employer's 4% dollar for dollar matching meets the requirements, as long as it's 100% vested from day one. Why does your company not have a safe harbor plan already?

I might be missing something here.

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Posted by LSUFanHouston

NOLA

Member since Jul 2009

37311 posts

Posted on 3/16/15 at 11:30 pm to TigerstuckinMS

quote:
to either offer 100% dollar for dollar match on the first 4% of each employee's total yearly compensation that the employee chooses to invest themselves or put 3% of each employee's yearly compensation directly into that employee's 401k plan whether or not the employee makes a voluntary contribution themselves, as long as all money in the plan was 100% vested from day one.

You got the second safe harbor correct. The first one is dollar for dollar to 3, and 50 cents on the dollar for 4 and 5. I'm not sure if 100 percent to 4 counts.

Also, under either option, employer match must be 100 percent vested from the start. So if you have a vesting schedule, it doesn't matter what percentage you match or contribute - no safe harbor.

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