A Safe Harbor 401(k) plan generally satisfies the non-discrimination requirements for elective deferrals and employer matching contributions as long as a few rules are satisfied. For a 401(k) Plan to be considered a Safe Harbor plan, employers are required to make certain contributions on behalf of their employees (highly compensated employees may be excluded from these contributions). Special vesting and notice requirements also apply. Because of these requirements, the Safe Harbor 401(k) plan is exempt from many of the complex testing rules that apply to a Non-Safe Harbor 401(k) plan.


  • Basic Safe Harbor Match – 100% of the first 3% of deferred compensation plus 50% of the next 2% of deferred compensation (4% total).
  • Enhanced Safe Harbor Match – must be at least as generous as the basic formula (i.e. 100% of the first 4% of deferred compensation).
  • Nonelective Contribution – 3% of compensation, regardless of employee deferrals.

The testing exemption is attractive to many employers who want to maximize their plan benefits and would otherwise be limited by non-discrimination testing constraints. Employees like Safe Harbor plans too because of the generous employer contribution and full vesting.

In considering a Safe Harbor 401(k) plan there are certain dates to be aware of: a new plan can adopt a Safe Harbor provision by October 1, 2017 for the 2017 plan year, and a new or existing plan can be amended to add a Safe Harbor provision by December 1, 2017 to be effective January 1, 2018. Contact your plan consultant today for more information on Safe Harbor plan designs, including those with an automatic enrollment feature.

For a summary of the requirements of a traditional Safe Harbor 401(k) Plan, please download our Understanding the Safe Harbor Feature flyer.