Brief about Safe Harbour plan

The Safe Harbor 401k plan is a plan which allows you to avoid the annual compliance tests with the employer’s match. If the plan includes the Harbor provision, employers will have to make annual contributions to their employees. There are three types of safe harbors, and two of them include employer matches, so you might hear people referring to the “Safe harbor match."

Requirements

Anyone who currently possesses the cash balance plans might offer you a matching contribution employer plan or harbor match. However, if you are on the verge of signing the new plan, you should always ask about the Safe harbor plan in advance. Most of the 401k Providers List have an option because it is recommended for small companies.

Let's look at some requirements to be met. First, you will have to meet any plan requirements to be considered a legal, safe harbor. 

•    Elective (Basic Match): - The company matches hundred percent employee contribution of 401k plan is up to 3 percent of the compensation and additionally 50 percent match of next 2 percent of the compensation.
•    Elective (Enhanced match): - The company matches hundred percent employee contribution of 401k plan is up to 4 percent of the compensation.
•    Non-Elective: - The company is contributing 3 percent of the employee's compensation, no matter whether the employee is making contributions or not. 

Companies that want to go beyond and above for their employees can offer the best percentage matches and still qualifies for the safe harbor. Most people and safe harbor plans generally offer four percent. The Elective options are better suited for you if you are willing to encourage your employees to contribute by actively inspiring them for the matching contribution. The non-elective one means that the employee can contribute zero amounts but still receive the employer's contribution.

It is not like the various other matching types, and employers might choose a specific schedule, and safe harbor matches must vest immediately for the employees. It also means that the employees immediately own a hundred percent of their contributions without delays.