Safe Harbor 401k

A Safe Harbor 401(k) Plan allows plan sponsors to 'buy' their way out of traditional 401(k) plan testing. Doing so permits the Highly Compensated Employees to defer the maximum amount into the plan, without being restricted by the average of the Non-Highly Compensated Employee.

ADP Testing

Traditional 401(k) plans have a significant design restriction as the average deferral contributions of the Highly Compensated Employees cannot be discriminately higher than the average of the Non-Highly Compensated Employees. If the Highly Compensated Employees exceed this average, a portion of the deferrals must be refunded to the affected participants.