Safe Harbor 401k Rules

With a Safe Harbor 401k, you may not start a safe harbor 401k with less than 3 months remaining in the plan year. The safe harbor 401k rules, provide an exception to the 3 month rule for a completely new business. Such entities may establish a safe harbor plan with as little as one month in the plan year. However if you have a 401k plan and you want to add a safe harbor 401k provision, the safe harbor 401k rules to not permit you to add a safe harbor feature during the plan year.

Those are the basic rules to safe harbor 401ks. However there are some other rules that you may not know about. The safe harbor 401k rules do not allow for in-service withdrawals before age 59½. Thus under a safe harbor 401k employees can’t take their money out of the 401k while they are working for the company, even under a hardship distribution. They can still take a loan, however they just can’t get a distribution of their money until they quit, get fired, or go out on disability.

The safe harbor 401k rules also state that you can’t terminate the safe harbor 401k plan in the middle of a year. However due to the recession, the IRS made some changes on that rule and under certain conditions you can terminate the plan.

Want to know what the Safe Harbor 401k Rules have in common with the Lottery? Read Safe Harbor 401k Rules-Employee Disadvantage

To talk with us about Safe Harbor 401k Rules, you can contact us via our Contact Page. Or you can go to our request a quote page and Request A Quote for your Safe Harbor 401k.

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