---
title: Safe Harbor 401(k) Deadline for 2020
description: If you are looking into a retirement option for 2020, it is important to note that some of the options for small employers have deadlines on October 1st.
image: https://paysteady.com/hubfs/paysteady-logo.png
---

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Payroll Best Practices

# Safe Harbor 401(k) Deadline for 2020

If you are looking into a retirement option for 2020, it is important to note that some of the options for small employers have deadlines on October 1st.

[Daniel Rafeedie](https://paysteady.com/blog/author/daniel-rafeedie)

 Aug 25, 2020

---

As we approach the end of the third quarter, many small businesses are starting to tax plan for year-end 2020. 401(k) plans are a valuable benefit for employees that allow them to save for retirement, while also providing tax and other benefits for employers. If you are looking into a retirement option for 2020, it is important to note that some of the options for small employers have deadlines on October 1st. 

 

### **Safe Harbor 401(k) Plans must be setup before October 1, 2020.**

is not subject to the complex annual nondiscrimination tests that apply to traditional 401(k) plans, making it the most popular plan type for small businesses. These plans allow owners of a company to maximize their plan contributions, up to $57,000 for 2020! If you are looking into a new safe harbor 401(k) plan, please note these must be setup by October 1, 2020 and can often take a few weeks days to setup.

 

Employers can allocate safe harbor 401(k) contributions in one of three ways: 

1. Employer matches 100% of the employee’s elective deferrals, up to the first 3% of compensation, plus 50% of the employee’s elective deferrals, up to the next 2% of compensation.
2. Employer matches 100% of the employee’s elective deferrals, on the first 4% of compensation.
3. Employer contributes 3% of compensation to all eligible employees.
4. Employer may also make additional, discretionary contributions if desired.

For companies with a retirement plan already in place, now is the time to think about helping employees maximize annual deferrals and take advantage of a company match, while also maximizing tax deferrals for the owners.

 

If you currently have a profit-sharing plan, please let us know so your company's year-end reporting is accurate.

  

The personal deferral limit for 401(k) plans in 2020 is $19,500 for an individual. For participants age 50 or older, most plans allow an additional catch-up contribution of up to $6,500. Any contributions the company chooses to make are in addition to these limits.

 

 

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