A longtime resident of Scottsdale, Arizona, Jerry Guttman is the founder of Total Living Plan, a company that has been helping self-employed professionals plan retirement for almost four decades. Jerry Guttman leverages his experience and knowledge in retirement planning to advise clients on their best options for their unique situation, including safe harbor 401ks.

The 401k is a very well-known option for retirement investment that millions of Americans contribute to on a regular basis. A safe-harbor 401k plan can be laid out in three different variations and makes it easier for small business owners to pass the discrimination test of the IRS. The test ensures that every employee receives equal compensation in their 401k based on a percentage of salary.

If a small business already has a 401k plan in place, a safe harbor provision can normally be made. The basic plan sees the employer matching 100 percent of the first three percent of contributions, along with half of the next two percent. An enhanced plan ensures that an employer must at least match what compensation would be in a normal plan, as well as freezing the ratio of elective and non-elective payments. Lastly, a non-elective plan sees the employer match three percent of all contributions.