The IRS permits your selections in design including: whether to make an employer contribution, eligibility requirements, traditional & Roth for employee deferrals, vesting period, and loans. A Traditional 401k, Safe Harbor 401k, and Solo k each permit the same contribution limits; however, there are specific rules and features that differentiate the plan types. Our team will detail plan elements to help you with the best fit before implementation. We stay connected after your plan is in place to assure that the original blueprint is current with your dynamic business benefit intentions.
SAFE Harbor 401K
TRADITIONAL 401k
Solo k
Maximum Business Size
No limit
No limit
Businesses with no employees other than owners & spouses, includes partnerships
Individual Contribution Limit
$20,500 in 2022
$20,500 in 2022
$20,500 in 2022
Catch-up Contributions
$6,500 in 2022
$6,500 in 2022
$6,500 in 2022
Discrimination Testing (ADP)
Yes
No
No
Mandatory Employer Contribution
Yes, 3.5% or 4% match or 3% for all eligible employees
No
No
Loans Permitted
Yes
Yes
Yes
Hardship Withdrawals
Yes
Yes
Yes
Vesting
Up to 2 years for required match
Up to 6 years for match, up to 7 years for Profit Sharing
Up to 6 years for match, up to 7 years for Profit Sharing
Eligibility MAX
1 year, age 21, 1,000+ hours or 500+ hours in 3 consecutive years max
1 year, age 21, 1,000+ hours or 500+ hours in 3 consecutive years max
1 year, age 21, 1,000+ hours or 500+ hours in 3 consecutive years max
Rollovers To/From Other Retirement Accounts
Yes
Yes
Yes
Flexible Employer Contributions up to 25% of Pay
Yes, not to exceed $67,500 in 2022
Yes, not to exceed $67,500 in 2022
Yes, not to exceed $67,500 in 2022
Flexibility To Favor Owners/Officers
Yes
Yes
Yes
IRS Tax Form 5500
Yes
Yes
Only if assets are $250,000+ at year end
Establishment Deadline
Any date between Jan 1 and Oct 1; amendment from Traditional 401k up to Nov 30th
Dec 31st
Dec 31st
Highly Compensated Employees, those whose salary is above $135,000 in 2022 and owners of more than 5%, are subject to an additional contribution limit under a Traditional 401k / none with Safe Harbor 401k. This limit is calculated via the average deferral percentage (ADP) testing.
Source of chart data: IRS.gov.