For an updated list of available retirement plans and annual plan limits, reference our employee retirement plan chart.

Instead of fronting the costs of administrating an employee retirement plan for your employees, consider offering a Safe Harbor 401k plan. This take on the popular 401k plan allows employees of all salary levels to make the maximum salary deferral contributions. All employees 21 years or older with 1,000 hours of service in the previous year are eligible for a Safe Harbor 401k.

Safe Harbor 401k plans allow both employer and employee contributions up to a maximum of 100% of income or $42,000 (for 2005), whichever is less. Employees over 50 can make additional catch up contributions of $4,000.

While standard 401k plans require you to implement costly discrimination testing to ensure employees of all salary levels participate equally, Safe Harbor 401k plans excuse you from this obligation. In order to take advantage of this, you must make matching contributions to employee salary deferrals – 100% of the first 3% of employee compensation plus 50% of the next 2%. You can also elect to contribute a fixed amount of 3% to all eligible employees. A Safe Harbor 401(k) must be in place before any contributions can be made.

Keep in mind that all eligible employees become 100% vested immediately with a Safe Harbor 401k. You are responsible for administering the plan and keeping records. Also, non-elective contributions must be made regardless of your company's financial situation. If you decide to halt contributions, you must provide 30 days notice to your employees and you will need to pay for standard discrimination testing.