What Is a Safe Harbor Match?

A safe harbor match is a 401(k) retirement plan in which employers match every employee’s contribution to the business’s 401(k) plan up to a certain percentage. Businesses typically use a safe harbor plan to satisfy the IRS non-discrimination employer matching rules.

Safe harbor plans are used to make sure that highly compensated employees do not gain more from the 401(k) plan than non-highly compensated employees. There are two types of safe harbor plans that are differentiated by whether the employer matches all eligible employee contributions or chooses to match only employees who contribute to the plan. Safe harbor plans must be declared by employers before the beginning of each year.