The safe harbor 401(k) match
The basic safe harbor match and the 3% nonelective contribution, worked on a Northwind salary.
A safe harbor 401(k) meets the nondiscrimination rule for elective deferrals by formula instead of by test. The employer makes one of two fully vested contributions for every eligible non-highly compensated employee: the basic match, with a written notice before the year, or a 3% nonelective contribution whether or not they defer.
Where this lesson's rules come from
The sources behind this lesson's requirements, by kind. Background reading explains; it is never the authority for a rule. Anything marked as a convention is ours, not the rule-maker's.
- Federal statute
- IRC §401(k)(12)(B)–(C) (opens in a new tab)The safe harbor 401(k): the basic match and the 3% nonelective contributionFree to read
- IRS guidance
- IRS — 401(k) plan overview (opens in a new tab)Traditional, safe harbor and SIMPLE 401(k) plansFree to read
- Background reading — not an authority
- Wikipedia, “401(k)” (opens in a new tab)401(k)Free to read
The words this page teaches
Each links to its glossary definition, which also names the authority behind it and the components that render it.
- Safe harbor 401(k)A 401(k) that is not subject to the complex annual nondiscrimination tests because it makes a fully vested employer contribution — the basic match (100% of deferrals up to 3% of pay plus 50% of the next 2%), with written notice before the year, or 3% of pay to every eligible non-highly-compensated employee
- Elective deferralThe part of pay an employee chooses to put into a 401(k), 403(b) or SIMPLE plan instead of taking it as cash. Traditional deferrals are out of income-tax wages but stay in FICA wages
- 401(k) planA defined contribution retirement plan in which employees defer part of their pay, pre-tax or Roth, into their own accounts — up to $24,500 for 2026, plus catch-up from age 50 — usually with an employer match. A traditional plan is tested each year for nondiscrimination