Safe Harbor 401k PlansThe Safe Harbor 401k Plans allow employers to offer a retirement plan for their employees without having to run into the problem that come with discrimination testing. Most 401k plans need to have an annual nondiscrimination test to make sure that highly compensated employees are not receiving more benefits then non highly compensated employees. This can make setting up and maintaining a regular 401k hard and confusing especially for small businesses. The answer is a safe harbor act which forces the employer to contribute 3% of compensation to all eligible employees who worked for them during the last year. All of the contributions must be 100% vested. Vested Vested means that the owner of the 401k receives ownership of their retirement account or benefits. All contributions to a 401k must be 100% vested, Return From Safe Harbor 401k to 401k Information
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