Safe Harbor plans automatically satisfy ADP/ACP and top-heavy nondiscrimination tests, which is particularly valuable for small plans with a high ratio of HCEs or owner-heavy workforces. There are two main Safe Harbor contribution options, traditional match/non-elective and QACA match/non-elective. Traditional plans offer more budget flexibility but require annual compliance testing, which can result in corrective distributions to HCEs if tests fail. Safe Harbor is typically recommended when the sponsor values simplicity and predictability over contribution flexibility.
