First Class
PERSONAL FINANCE
Three Squares Gyratory Variation I, 1971, 2/3 by George Rickey Stainless Steel ( 14’ 6” x 14’ x 14’) Collection: George Rickey Foundation Licensed by VAGA, New York
Safe harbor
plans may
be the right
fit for you
Goodbye
World Renowned
American Kinetic Sculptor
George Rickey
401(k)s?
Outdoor Public Art
Walking Tour
June ‘ 11 - March ‘ 12
Downtown Albany, NY
downtownalbany.org
(518) 465-2143
Nearly one-third of all U.S. com-
panies offer employees so-called
Why are more companies offering
the option?
safe harbor retirement plans, as
Small business owners, in par-
opposed to traditionally designed
ticular, are gravitating toward the
401(k) plans, according to a recent
safe harbor option. it enables them
report by human resources consult- to avoid the administrative and
ing firm Hewitt associates. The
increasingly popular option comes
with benefits and disadvantages—
record-keeping costs associated
with performing expensive com-
pliance testing, says Mike alfred,
both for employers and for workers. cofounder and Ceo of brightScope,
a provider of 401(k) ratings and
What’s a safe harbor retirement plan?
financial intelligence.
Safe harbor plans are offered in lieu
of satisfying annual 401(k) nondis-
crimination tests and minimum
Is there a downside to a safe
harbor plan?
coverage requirements. These tests
are designed to ensure that a broad
base of employees—as opposed
to primarily highly compensated
employees and managers—benefit
from tax advantages associated
with retirement investing.
Some plan sponsors may find the
value of not performing nondis-
crimination tests out weighed by
other requirements and costs. For
instance, alfred points out, “the
company must make a manda-
tory safe harbor contribution for
andrio abero
Cover
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