One 401k provider is looking to spur activity in advance of the coming Oct. 1 government deadline for Safe Harbor 401k plan designs by offering a discount on plan setup costs.
Seattle-based ShareBuilder 401k, a 401k provider specializing in low-cost, easy to manage, index fund-based retirement plans that serves more than 6,500 businesses across the U.S., said that from Aug. 20-Sept. 3, it will offer a $200 discount on setup costs for businesses that set up a new plan before the Oct. 1 Safe Harbor deadline. The discount drops to $100 between Sept. 4-17.
Safe Harbor 401ks feature a variety of benefits for business owners and highly compensated employees looking to maximize tax-deferred contributions and minimize future tax burdens, while automatically satisfying IRS plan testing requirements. Once a plan is operational by Oct. 1, employees can still maximize their salary deferral for the plan year.
“Our goal is to help more business owners and employees save and invest for the future with low-cost retirement solutions, and the Safe Harbor plan is a great fit and opportunity for most businesses with employees to get on that path with some extra benefits and savings,” said Stuart Robertson, CEO of ShareBuilder 401k.
This year’s Safe Harbor deadline approaches as new legislation aimed at broadening access to employer retirement plans is under review. The Setting Every Community Up for Retirement Enhancement Act (SECURE Act) includes a provision increasing the cap under which a business can automatically enroll workers in “safe harbor” plans (from 10% to 15% of wages) and makes it easier for part-time workers to participate in employer-sponsored plans.
“The SECURE Act is well-intentioned and will hopefully have some impact, but we must also focus on tackling the heart of the issue, which is lack of awareness and education,” Robertson said. “For example, most small business owners don’t realize any size business can have a 401k plan, or what a Safe Harbor plan is, much less how it can benefit a business and its employees.”