Does your retirement plan have trouble passing compliance testing? Do you have employees that are unable to maximize their contributions? If you oversee a retirement plan this is a great time of year to consider becoming a Safe Harbor plan.
A Safe Harbor retirement plan commits to offering an employer contribution/match for the upcoming plan year. In doing so, the plan does not require Actual Deferral Percentage (ADP), Actual Contribution Percentage (ACP), and in certain cases, Top-Heavy tests.
The Safe Harbor status has certain minimum requirements in an employer contribution/match as well as vesting. Determining which is best suited for your plan depends on the goals and priorities of your retirement benefits package. Considering participation rate and deferral rate goals can aid in calculating employer contribution and match cost projections.
The Safe Harbor status applies to the entire plan year so if your plan year ends December 31, the deadline for deciding to become Safe Harbor in 2023 is approaching this fall. Depending on your recordkeeping partner, initiating a Safe Harbor status might need to be communicated to them as early as September.
To learn more about Safe Harbor plans, contact your retirement plan advisor. If you are in need of a retirement plan advisor, start a conversation with us. We’re ready to help!