As discussed in our primer on nondiscrimination testing, given the significant tax benefits of 401(k), a plan could fall into the trap of being almost exclusively enjoyed by company owners and officers. While the IRS permits participants to defer up to $19,500 (or $26,000 if the participant is over age 50) of compensation and receive additional employer contributions up to a combined total of $57,000, small business owners often overlook the nondiscrimination rules that limit contributions of certain owners, officers, and other Highly-Compensated Employees (HCEs) if they don’t offer a Safe Harbor plan.
Please click on the links below to learn more:
- Who is an Officer, Highly Compensated or Key employee?
- Determine Ownership and Family Attribution
- I’m an HCE and/or Key employee – what does this mean for me?
- I'm a Plan Admin and/or Participant--What Can I Do?