Choosing a Safe Harbor Plan allows you to take advantage of both the boost and the offset.

Safe harbor contributions must be either:

• An employer or non-elective contribution of at least 3% for all eligible employees

Or

• A matching contribution of no more than 4% of employee compensation*.

Safe Harbor Plans require that both non-elective and matching contributions be fully-vested. Because prevailing wage contributions are fully vested, they count toward fulfilling this requirement.

Although it may seem the match option would be more expensive, it's important to remember that the match is based on what employees are contributing - whereas the 3% contribution must be made for all eligible employees, whether they are participating in the plan or not. Safe harbor plans require that all eligible employees must receive notice of the intention to adopt a safe harbor plan no more than 90 days and at least 30 days prior to the beginning of the plan year.

*The matching contribution must be a 100% match on deferrals of up to 3% of compensation, plus 50% of deferrals from 3% to 5% (i.e. an employee who defers 5% of compensation would receive a 4% contribution).

2009 SAFE HARBOR EXAMPLE

WITH SAFE HARBOR MATCH

WITH SAFE HARBOR 3% NONELECTIVE

Safe harbor plans have a notice requirement and a contribution requirement.

Notice requirement:

All eligible employees must receive notice of the intention to adopt a safe harbor plan no more than 90 days and at least 30 days prior to the beginning of the plan year.

Contribution requirement:

Safe harbor contributions must be either:

• An employer or non-elective contribution of at least 3% for all eligible employees

Or

• A matching contribution of no more than 4% of employee compensation*.

*The matching contribution must be a fully-vested 100% match on deferrals of up to 3% of compensation, plus 50% of deferrals from 3% to 5% (i.e. an employee who defers 5% of compensation would receive a 4% fully-vested contribution).