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#1
12-02-2008, 06:40 AM
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401K question/ Safe Harbor
I just recieved the "Safe Harbor" report from my employer describing contributions to the comapny 401K plan.
In this context, what does "Safe Harbor" mean? How did the term originate?
__________________
1982 300SD " Wotan" ..On the road as of Jan 8, 2007 with Historic Tags 
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#2
12-02-2008, 12:07 PM
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A "Safe Harbor" 401(k) is a plan that will allow the highly compensated employees to have a disproportionately large share of the funds in the plan. The company does this by making contributions to the accounts of non-participatory employees. IOW, in a non SH plan, the company only makes employer contributions based on a matching schedule (you don't defer, we don't match) but the high comps are only allowed to have a certain percentage of the total assets in the plan. In a SH plan, the employer makes contributions (usually 2% of gross wages) to the accounts of even those who are eligible but don't participate and in return, the plan allows the high comps to hold more than their fair share of the plan assets.
__________________
1983 M-B 240D-Gone too. 1976 M-B 300D-Departed. "Good" is the worst enemy of "Great".
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#3
12-02-2008, 12:21 PM
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As a high comp, I'm not sure I agree with the "more than their fair share part".
 Its been a few years since I've read up on this but to my knowledge, SH allows HC's to contribute the same 15% as everyone else rather than be held to the group avg contribution. If there is a profit sharing component, it can be good to be a HC and/or officer.
__________________
Terry Allison N. Calif. & Boca Chica, Panama 09' E320 Bluetec 77k (USA) 09' Hyundai Santa Fe Diesel 48k (S.A.)
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#4
12-02-2008, 12:31 PM
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In my last job my contributions were restricted because of this. There was no match or company contribution of any kind. I guess this is why.
__________________
" We have nothing to fear but the main stream media itself . . . ."- Adapted from Franklin D Roosevelt for the 21st century  OBK #55 1998 Lincoln Continental - Sold Max 1984 300TD 285,000 miles - Sold The Dee8gonator 1987 560SEC 196,000 miles - Sold Orgasmatron - 2006 CLS500 90,000 miles 2002 C320 Wagon 122,000 miles 2016 AMG GTS 12,000 miles
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