Safe harbor made easier for pension plans.

Investment News, January, 2000 by Geisel, Jerry

'True-up' obstacle eliminated by IRS The Internal Revenue Service is removing a major administrative hassle and expense for employers who want to offer generous 401(k) plans that are exempt from non-discrimination tests. A 1996 federal law that went into effect last year gives employers an incentive to beef up their 401(k) plans.

Employers offering plans with rich contribution formulas that meet or exceed one of two "safe harbors" are not required to go through the time and expense of running non-discrimination tests on the plans. Plans meeting those safe harbors are automatically considered non-discriminatory. To meet the safe harbors, employers must either contribute to the 401(k) plan at least 3% of compensation for each eligible non-highly...

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