Retirement Savings "Safe Harbor" question...

[arthur06]

I was looking at my online retirement account today. I just upped my percentage and also received a monthly and wanted to make sure that it was all done correctly.

I noticed on my account the following...

Before-Tax Contributions +$xxx.xx
Safe Harbor Company Match +$xx.xx
Safe Harbor xxxxxxx Stock Match +$xx.xx
Retirement Contribution +$xx.xx
Gains/Losses -$x.xx


Can anyone elaborate what a "safe harbor" Match is? I tried to look it up, but it felt like the more I looked the more confused I got?

 

[arthur06]

 

[PatsMom]

A safe harbor contribution has to do with the plan being top heavy. That means the highly compensated people are getting more benefit from the plan than the lower paid people. A company in that situation can opt to make matching contributions and do annual testing and potentially have to tell highly compensated employees they have to withdraw anything that is deemed to be too much.

The safe harbor is an amount the company can elect to contribute for all employees that will allow them to continue to operate the plan without the expensive and tedious process of testing the plan annually. For example, my company gives a 3% safe harbor contribution to everyone. They can elect to make a higher profit sharing contribution if we are having a good year but they have to put in at least the 3%.