Safe Harbor Deadline Nearing

 

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.

If you are interested, have questions, or would like a free proposal, please contact Lori Plescia, CFP®, CPA, PFS, QPFC at lplescia@bwtpcpa.com or Anne Christian, CPA at achristian@bwtpcpa.com.

Robert (Bob) Schmidt, CPA

Principal at BWTP, P.C. Read Bob’s bio here.

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