Safe Harbor Deadlines Nearing
Adopting a retirement plan is a perfect way to save for retirement and reduce your tax liability. With a Safe Harbor 401(k) Plan, owners and highly compensated employees can maximize their contributions even if other employees make limited or no contributions of their own.
A Safe Harbor 401(k) Plan:
- Allows business owners to defer up to $19,500 with payroll deductions, regardless of what their employees defer. Deferrals can be pre-tax or Roth.
- Add $6,500 to the limits if the employee is age 50 or over.
- Reduces complexity
- Is flexible
All Employer contributions to the plan are deductible on the company return, thus lowering tax liability. An employer adopting a new 401(k) plan may qualify for an additional tax credit of up to $5,000 per year for the first three years.
To benefit from starting a Safe Harbor 401(k) plan in 2021, your plan needs to be fully operational by October 1, 2021.