What Is a Safe Harbor Savings Account?

There are various types of 401(k) retirement plans for businesses to offer their employees. One option is the Safe Harbor 401 (k) plans. A Safe Harbor plan typically means more saving for employees and less hassle for employers.


The Safe Harbor plan allows employees a way to contribute a part of their salary to a 401 (k) plan. For instance, the maximum amount you may contribute is $16,500 to your plan, according to ING Direct.


The Safe Harbor plan also allows employers to contribute to your retirement plan.



For instance, your employer can choose between two contribution options with a Safe Harbor 401(k) plan. One option is to match, 100 percent, your contribution. The other option is give a non-elective contribution of 3 percent, according to ING Direct.



The Safe Harbor plans provide retirement income and automatic eligibility for new employees, according to State Farm.



However, if you want to withdraw money for your Safe Harbor 401(k) plan before you reach 59 and 1/2 years old, there is a penalty. Typically this includes a 10 percent tax penalty and the requirement to pay federal income tax on the distribution amount.