Want to help your clients manage their 401(k) plan more efficiently?
Looking for a big-business feature you can offer small-business clients?
The Online 401(k)’s Safe Harbor plan is an incredibly useful type of 401(k) plan that waives your client’s compliance testing requirements, something many small businesses worry about.
Here are some FAQs about Safe Harbor and compliance testing:
What is compliance testing?
How can Safe Harbor help my clients?
What kind of business is Safe Harbor best for?
What is the cost and how can my client get a Safe Harbor plan?
What is compliance testing?
Compliance testing (also known as discrimination testing) ensures that your clients don’t establish a plan that treats their employees unequally. The tests make sure that highly compensated employees don’t contribute more significantly than other employees. This testing is required by the government.
The Online 401(k) conducts this testing on behalf of our clients.
How can Safe Harbor help my clients?
With a Safe Harbor plan, your client doesn’t have to worry about the results of these compliance tests. How? The Safe Harbor plan allows your client to contribute on behalf of non-highly compensated employees to automatically pass these tests – and those contributions are tax-deductible.
What kind of business is Safe Harbor best for?
Any small business that has a larger proportion of highly compensated employees is an ideal candidate for Safe Harbor.
How can I get a Safe Harbor plan for my client and what is the cost?
If your client is establishing a 401(k) plan for the first time, you can add a Safe Harbor provision right from the start.
However, if your client is converting from a traditional 401(k) plan to Safe Harbor, they will need to do so at least three months before the beginning of the next plan year, meaning before October 1st.
There is no additional cost for a Safe Harbor plan.
E-mail us at advisors@theonline401k.com or call us at 877.775.401k to find out more information about this plan!
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