Safe Harbor 401(k): A Growth Strategy for Financial Advisors

As more states mandate retirement savings programs for businesses of certain sizes, many advisors are still laser-focused on providing standard 401(k)s. You can gain an edge by adding Safe Harbor 401(k) plans to your repertoire. Apply this step-by-step strategy to your business, convert your prospects into customers, and grow your book of business.

Key Takeaways:  

• Start by goal setting.  
• Analyze your contacts and define your target audience.
• Use urgency in your outreach to make it irresistible.
• Talk through specific points to appeal to your business-owning contacts.
• Help your clients beat the Safe Harbor deadline in partnership with ePlan Services.

Set an objective

Every solid strategy needs an objective to strive for, so start by building your goalposts. Keep your objectives specific, measurable, and time-bound: for example, “sell one new Safe Harbor 401(k) plan before the October 1, 2025 deadline.” Setting a goal, even a small one, allows you to compare approaches. If you fail to meet your goal, you can review your tactics and adjust your course of action.

Identify your target audience

Next, define who exactly you’ll reach out to. Scattershot outreach rarely produces results, while targeted messages can be tailored to the recipient’s needs and wants.

Safe Harbor 401(k) plans are a good fit with a specific set of company attributes:

1. Organizations lacking comprehensive plan admin resources (they may not have the time or the know-how to conduct things like nondiscrimination testing.)
2. Companies with highly compensated employees can maximize contributions, pass IRS testing and avoid penalties with a Safe Harbor plan.

Analyze your contact list and select organizations with these attributes. For example, small businesses like mom-and-pop restaurants or startups are more likely to lack the resources to conduct non-discrimination testing. Identify the key contact at each organization and note the best way to possibly reach them.

Leverage urgency in your outreach

Newly established Safe Harbor plans need to be in place by October 1^st. This deadline creates a sense of urgency that you can use to your advantage when reaching out to your target audience.

1. It gives you a compelling reason for reaching out and creates the opportunity to present yourself as an expert advisor with their company’s best interests in mind.
2. For your own clients and leads, offer to review their current plan. If they’re using a traditional 401(k), a Safe Harbor design might help them avoid costly testing failures.
3. For contacts working with another advisor, ask if the Safe Harbor deadline has even come up yet. If it hasn’t, that’s your chance to step in and provide expert guidance. 

Building a sense of urgency does not mean putting pressure on your contacts, however. Emphasize the deadline in your outreach, position yourself as a helping hand, and shine a spotlight on the benefits of a Safe Harbor 401(k) for their business. For companies in your target audience, the key benefits you should highlight include maximizing contributions, exemption from certain compliance tests and easy administration.

Once you start getting responses to your outreach, follow up and schedule conversations.

Initiate valuable conversations

Retirement plan conversations often reveal hidden issues like nondiscrimination test failures, low employee participation, or confusing employer match structures. These issues can cause frustration for plan sponsors and admins, leaving them to question the effectiveness of their current plan setups.  Listen for these pain points in conversations with prospects.

A Safe Harbor plan helps to alleviate these issues in the following ways:

1. It satisfies compliance testing requirements. 
2. The mandatory employer match structure can appear more attractive to new and existing employees than the optional match of a traditional 401(k).  
3. There are match structures suitable for most types of employers: a basic match, an enhanced match, and a non-elective match.  

Plus, the employer match requirement creates a powerful tool for attracting and retaining top talent, which is extremely valuable to your clients in today’s competitive job market.

Appeal to high-earning business owners by helping them max out their contributions

Many business owners don’t realize that a Safe Harbor 401(k) plan can help them contribute more money to their own retirement plans. It not only allows them to maximize their deferrals without worrying about testing failures, but it also opens the door for additional tax savings.

For example, in 2025, a business owner over the age of 50 can contribute up to $31,000 in salary deferrals, including catchup contributions, plus receive employer contributions of up to $46,500 that could bring their savings total to $77,500 (if the plan allows), all without having to worry about compliance testing failures. That’s a healthy chunk of money they can put towards their future. With a more secure nest egg, business owners may be more open to exploring your other services, such as wealth management, tax strategy, or personal financial planning. 

Help your clients beat the deadline

You’ve set your goal, identified your audiences, reached out, and had valuable conversations resulting in a client expressing a desire to move ahead with establishing a Safe Harbor 401(k) plan. With the Safe Harbor deadline looming, it’s critical to move fast—and ePlan Services is here to help.

We can set up a new plan in 15 minutes and have it funded in 24 hours. So, in cases where time is of the essence, reach out immediately to your local 401(k) wholesaler. We can also help you craft proposals with an additional edge, helping you achieve your growth strategy’s objectives.

 Conclusion:  

Safe Harbor plans aren’t just a compliance check box; they can also be your secret weapon for business growth. As more clients seek compliant-friendly retirement solutions, you can take the lead by offering plans that are attractive, easy to manage, and deliver valuable tax savings.