![]() When these maximum limits are reached, employers could feasibly contribute $40,500 in additional compensation on top of what each employee saves. Younger employees are allowed to put up to $22,500 into their accounts, while older employees making catch-up contributions are allowed up to $30,000. The MAXIMUM nonelective contribution for Safe Harbors is up to the employer’s discretion, but may not exceed the IRS limit of $66,000 for employees under 50 or $73,500 for employees age 50 or older. So, for instance, if an employee earns $300,000 in 2023, the employer would put at least $8,550 into the worker’s 401(k) account. The MINIMUM nonelective contribution for a Safe Harbor plan is 3% of an employee’s salary. What are the minimum and maximum nonelective contributions? The nonelective contributions are non-forfeitable and 100% vested immediately.The employer funds are put into the accounts, regardless of whether or not employees save. ![]() All eligible employees will receive a fund deposit from the employer.Depending on how the plan is drawn, employees typically can contribute to their own 401(k)s.What are the rules for Safe Harbor nonelective contributions? The benefit of a Safe Harbor 401(k) for employers is that in exchange for making contributions to their employees, they are exempt from annual IRS testing. Unlike matching contributions, nonelective contributions are given to all eligible employees even if they are not making salary contributions to the plan. Employers with a Safe Harbor 401(k) plan must choose one of two options: to match employee contributions or to make nonelective contributions.
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