Safe Harbor Formulas and Deadlines

Safe Harbor status can exempt your plan from some IRS non-discrimination tests. In order to have Safe Harbor status, your plan must elect one of the three available Safe Harbor formulas (listed below) by November 30th for Safe Harbor status to go into effect January 1st the following year

Here are the three Safe Harbor formulas:

  1. Basic Matching: The company matches 100% of all employee 401(k) contributions, up to 3% of their compensation, plus a 50% match of the next 2% of their compensation. 
If the employee’s contribution is…. Safe Harbor Basic Employer Match is...

0%

0%

1%

1%

2%

2%

3%

3%

4%

3.50%

5%

4%

6+%

4%

  1. Enhanced Matching: The company matches at least 100% of all employee 401(k) contributions, up to 4% of their compensation (not to exceed 6% of compensation).

If the employee’s contribution is….

Safe Harbor Enhanced Employer Match is...

0%

0%

1%

1%

2%

2%

3%

3%

4%

4%

5%

5%

6+%

6%
  1. Non-Elective Contribution: The company contributes at least 3% of each employee’s compensation (not to exceed 25%), regardless of whether employees make contributions. This means that even if the employee doesn’t participate in the plan, you are still giving them the designated percentage each pay period. 

If the employee’s contribution is….

Safe Harbor Non-Elective Contribution is...

0%

designated percentage between 3% and 25%

1%

designated percentage between 3% and 25%

2%

designated percentage between 3% and 25%

3%

designated percentage between 3% and 25%

4%

designated percentage between 3% and 25%

5%

designated percentage between 3% and 25%

6+&

designated percentage between 3% and 25%


If you miss the November 30th deadline to amend your plan for Safe Harbor status the following January 1st, the rules now allow you to elect Safe Harbor status mid-year. To learn more about adding Safe Harbor status mid-year, check out
this Help Center article





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