Safe Harbor 401(k)s

A Safe Harbor 401(k) is a way business owners to contribute to their employees' retirement plans. You can maximize your contributions to your own account but are required to provide a match to employees as a percentage of compensation.

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The last thing you need is added complexity in running your business. A Safe Harbor 401(k) can be a complicated retirement plan option – so let us take the guesswork out of it.

With a Safe Harbor 401(k), as the business owner you must be willing to make required contributions in the form of a match. Any size business may find these plans attractive, but take a closer look if:

  • You have fewer than 25 employees.
  • You are open to making required employer contributions.


A Safe Harbor 401(k) lets you contribute the maximum amount to your own account. But you must also provide a "safe harbor" match or contribution to employees' accounts as a percentage of their compensation. This means you and your highly compensated employees can maximize tax-deferred contributions without the restrictions of a traditional plan that doesn't require matching.

Contribution features

  • All participants can make the maximum salary deferral contribution. 
  • Contributions can be pretax, after-tax (Roth deferral contributions) or both.
  • Total contributions from both sources (employer and employee) may not exceed 100% of income or $61,000 per eligible participant. 
  • The employer is required either to match employee contributions (100% of the participants’ first 3% of salary and 50% of the next 2% of salary) or provide a non-elective contribution (3% of salary for all eligible employees).


  • Employee deferral and Safe Harbor contributions are immediately vested.
  • This type of plan can be complex and requires an administrator for compliance, plan maintenance, record keeping, IRS Form 5500 filing and required testing.


  • Setup Deadline: 
    • You must establish the plan before contributions can be made by any participants, including owners. 
    • The last day to establish a plan for the current plan year is Oct. 1.
  • Contribution Deadline: 
    • Participant contributions must be deposited as soon as feasible, but never later than the 15th business day following the month they were withheld.

How we can help

An Edward Jones financial advisor can provide information about the types of retirement plans available.

Important Information:

This information is for educational purposes only. Edward Jones, its employees and financial advisors cannot provide tax or legal advice.