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Asked 8/26/2010

Small Business 401(k) and Safe Harbor

I own a small business (sole proprietorship) that employs 4 other people. I earn around $70K and my employees earn $25K - $35K. I am considering setting up a company 401(k) plan. Here is my question:
If I set the plan up with salary deferrals and a 4% safe harbor company match, what happens if I sign up myself and all my employees (assume all are eligible) but I contribute and they choose not to contribute. That is, do I still meet safer harbor requirements if my 401(k) account balance increases each year, but my employees' account balances stay at zero?

Bruce F.

 
 
 
 
 
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