![]() ![]() ![]() A 15% maximum automatic contribution rate for QACA Safe Harbor 401(k)s.The SECURE Act (first in effect for the 2020 plan year) created the following changes that remain in place for 2022: The threshold for highly compensated employee nondiscrimination testing increased $15,000 to $200,000.The threshold for key employee top-heavy testing increased $15,000 to $200,000.The maximum employee limit for calculating contributions increased by $15,000 to $305,000 in 2022.The employer/employee maximum is $61,000 – up $3,000 from 2021.Those age 50 or older can add another $6,500 in catch-up contributions.Both traditional and Safe Harbor 401(k) plan limits increase by $1,000 to $20,500 in 2022.The upper limit for 401(k) contribution limits, including for Safe Harbor plans, went up in 2022: On average, HCEs cannot contribute more than two percentage points greater than NHCEs.The contribution must be immediately vested.Employers must provide a matching or nonelective contribution to all 401(k)-eligible employees.These plans allow you to bypass testing when you accept a few ground rules that ensure fairness for Non-Highly Compensated Employees (NHCEs) and Highly Compensated Employees (HCEs). If you’ve failed ADP and ACP nondiscrimination tests or if IRS compliance is of concern to you, then it’s worth looking into the Safe Harbor 401(k) plan. Whether you’re a solopreneur, startup owner, or employ fewer than 100 people, we keep up on the latest plan rules to keep you in compliance. Since 1999, small businesses have counted on Ubiquity Retirement + Savings to administer affordable retirement solutions, including Safe Harbor 401(k)s. As one of the leading providers of small business retirement plans, Ubiquity can help you do just that. If you have an existing 401(k) that is not a Safe Harbor, making the switch is as easy as adding a plan amendment. It’s helpful to know which IRS rules and limits apply from year to year, whether you currently offer a Safe Harbor 401(k) or you are exploring options to open a small business 401(k) plan in 2022. See what rule changes are in place for small business Safe Harbor 401(k) plans for 2022.
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