Safe Harbor 401(k) Plan

The Safe Harbor 401(k) Plan allows eligible employees to contribute a portion of their own salary to a retirement plan. Salary deferrals can be pre-tax contributions (excluded from income for federal income tax purposes) or Designated Roth Contributions (after-tax contributions and qualified distributions can be tax and penalty free). Employers contribute either matching or non-elective amounts to the retirement plan on behalf of eligible employees. A safe harbor 401(k) plan may help you with recruiting and retaining the best employees.

Safe Harbor 401(k) Plan Features

  • Sole proprietorships, partnerships, limited liability companies (LLCs), or incorporated businesses, including subchapter S corporations, may establish a 401(k) plan. All eligible employees must be allowed to participate in the retirement plan.
  • Designated Roth Contributions are an option for salary deferrals and there are no income restrictions on who may make these contributions.
  • Salary deferral contributions of up to $18,500 ($24,500 for age 50 and over) in 2018.
  • Automatic enrollment and automatic increase features are available to help employees save for their retirement.
  • All employee and Safe Harbor 401(k) matching or non-elective contributions are 100% vested immediately. The employer may elect to use a graded vesting schedule for discretionary contributions.
  • Generally, the deadline to establish a new plan is anytime between January 1 and October 1 of the applicable year.
  • Tax-deferred growth — any investment earnings grow tax-deferred until withdrawn.
  • Generally, the 10% tax penalty on distributions applies to participants under the age of 59½. Participants will have to pay federal income tax on the distributions.

Risk Disclosures

Securities issued by State Farm VP Management Corp. For more information, call 800-447-4930. Automatic investment plans do not assure a profit or protect against loss.

Neither State Farm® nor its agents provide tax or legal advice.


Not FDIC Insured

  • No Bank Guarantee
  • May Lose Value