Retirement Plans for Small Businesses

Safe Harbor 401(k) Plans May Help Owners and Employees Save More

With standard 401(k) plans, the amount that a company’s owners or highly compensated employees can contribute is often restricted by how much other employees contribute to the plan, making such plans a less effective savings vehicle for many small businesses. However, with the more flexible safe harbor option, owners may be able to make larger contributions for themselves (as employee and employer) in exchange for making tax-deductible contributions or “matches” for employees.

In addition, the annual IRS non-dis-crimination testing that normally applies to standard 401(k) plans is eliminated from safe harbor plans, which typically makes them easier and less expensive for small businesses to maintain.

To help shelter more of your income from taxes, and possibly help your employees do the same, compare the benefits and limitations of safe harbor 401(k) plans to other retirement plans to determine which one could best meet your company’s needs.

The information in this article is not intended as tax or legal advice, and it may not be relied on for the purpose of avoiding any federal tax penalties. You are encouraged to seek tax or legal advice from an independent professional advisor. The content is derived from sources believed to be accurate. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. This material was written and prepared by Emerald. © 2012 Emerald.

*James B. Rawlings, CFP is a Registered Representative of and offers securities through Royal Alliance Associates, Inc. Member FINRA/SIPC, a registered investment advisor. In this regard, this communication is strictly intended for individuals residing in the states of Utah,Arizona, Idaho, Missouri, Nevada,Oregon, Washington. No offers may be made or accepted from any resident outside the specific state(s) referenced. James is also separately registered as an investment adviser representative of OakBridge Asset Management, LLC, a registered investment advisor, offering Advisory and Insurance services in the state of Utah, and Adivsory services only in Washington and Missouri. As such, these services are strictly intended for individuals residing in these states. Additional Advisory services offered through Royal Alliance Associates, Inc., a Registered Investment Advisor. OakBridge and Royal Alliance Associates, Inc., are not affiliated. 897 Baxter Dr. South Jordan UT 84095 801.327.7222 IMPORTANT CONSUMER INFORMATION: A broker-dealer, investment adviser, BD agent, or IA rep may only transact business in a state if first registered, or is excluded or exempt from state broker-dealer, investment adviser, BD agent or IA rep registration requirements, as appropriate. Follow-up, individualized responses to persons in a state by such a firm or individual that involve either effecting or attempting to effect transactions in securities, or the rendering of personalized investment advice for compensation, will not be made without first complying with appropriate registration requirement, or an applicable exemption or exclusion. For information concerning the licensing status or disciplinary history of broker-dealer, investment adviser, BD agent, or IA rep, a consumer should contact his or her state securities law administrator.