| Feature | Alignment(k) Start Safe Harbor Match |
Alignment(k) Start Safe Harbor Non-Elective |
Alignment(k) Start Traditional 401(k) |
Alignment(k) Solo |
|---|---|---|---|---|
| Best For | Encouraging employee savings | Consistent employee benefits | Maximum flexibility | Owner-only businesses |
| Business Type | Employers with employees | Employers with employees | Employers with employees | Owner-only |
| Employer Contribution | 100% match on first 3%, then 50% on next 2% | 3% contribution for all eligible employees | Discretionary | Employee and employer contributions permitted |
| Employee Participation Required | Yes, needed to receive the match | No, contribution is provided regardless of deferrals | No, employer contributions are discretionary | N/A, no common-law employees |
| Annual Testing | Generally exempt from ADP/ACP testing* | Generally exempt from ADP/ACP testing* | Annual nondiscrimination testing generally required | No nondiscrimination testing while owner-only* |
| Roth Contributions | Yes | Yes | Yes | Yes |
| Catch-Up Contributions | Yes | Yes | Yes | Yes |
| Loans Available | Yes | Yes | Yes | Yes |
| Automatic Enrollment | Optional | Optional | Optional | N/A |
| Employer Contribution Flexibility | Moderate, formula is fixed by plan terms | Moderate, fixed at 3% of eligible compensation | High, contributions are discretionary each year | Moderate, contribution levels set by plan design |
*Subject to applicable plan requirements, eligibility and plan operation.
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|---|---|---|---|---|
| Best Fit | Broad solution for diverse client needs | Strength of American Funds investments | Personalized service and flexible plan design | Streamlined solution with broad capabilities |
| Pricing Approach | Tiered pricing | Asset-based pricing | Asset-based pricing | Tiered or asset-based |
| Sponsor Fees | Competitive | Competitive | Competitive | Competitive |
| Participant Fees | Low and transparent | Competitive | Competitive | Competitive |
| Investment Flexibility | Broad fund lineup | American Funds exclusive options | Open architecture | Broad fund lineup |
| Participant Experience | Modern digital tools and education | Established investor education resources | Robust participant website and support | Intuitive online experience |
| Key Differences | National scale and technology | Deep American Funds investment lineup | Longstanding insurance and retirement expertise | Flexible plan design options |
| Share Classes | Multiple share classes available | Multiple share classes available | Multiple share classes available | Multiple share classes available |
| Commission vs. Fee-Based |
Both available | Both available | Both available | Both available |
| Advisor Compensation | Revenue sharing | Revenue sharing | Revenue sharing | Revenue sharing |
| Investment Architecture | Open architecture | Proprietary + open options | Open architecture | Open architecture |
| Recordkeeper-Specific Requirements |
Standard onboarding requirements | Standard onboarding requirements | Standard onboarding requirements | Standard onboarding requirements |
| Detailed Pricing | Available upon request | Available upon request | Available upon request | Available upon request |
Every Alignment(k) is established in partnership with a financial advisor.
Exact recordkeeping, investment, and advisory fees vary by solution. Please refer to each provider for complete fee details.
Choosing the right retirement plan starts with understanding your business goals, workforce, and contribution strategy. Use the guide below to identify which Alignment(k) solution may be the best fit.
Safe Harbor Match — Best for: Encouraging employee savings
A strong fit for employers with employees who want to reward participation through a 100% match on the first 3% of compensation plus 50% on the next 2%. This design is generally structured to satisfy certain annual nondiscrimination testing requirements when applicable safe harbor requirements are met.
Safe Harbor Non-Elective — Best for: Consistent employee benefits
Well suited for employers who want to provide a 3% contribution to all eligible employees regardless of participation, without requiring employees to defer. This design is generally structured to satisfy certain annual nondiscrimination testing requirements when applicable safe harbor requirements are met.
Traditional 401(k) — Best for: Maximum flexibility
Designed for employers who want discretionary control over employer contributions and the highest degree of contribution flexibility, though the plan may require annual testing depending on participation.
Alignment(k) Solo — Best for: Owner-only businesses
Ideal for self-employed individuals and businesses with no employees other than the owner and a spouse who want to maximize retirement savings with employee and employer contributions permitted and no annual testing required.
Compare your options, choose a plan design, and take the next step toward building a retirement benefit that supports your business goals and your participants’ future.
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What’s the difference between Safe Harbor Match and Safe Harbor Non-Elective?
Both are designed to provide the benefits of a safe harbor 401(k), but the employer contribution works differently. With Safe Harbor Match, eligible employees generally receive an employer contribution when they contribute to the plan. With Safe Harbor Non-Elective, the employer contributes 3% of eligible compensation regardless of whether the employee contributes. The better choice usually comes down to whether you want your employer contribution tied to employee participation or provided consistently to eligible employees.
Why would I choose a Traditional 401(k) instead of a Safe Harbor plan?
A Traditional 401(k) provides greater flexibility over employer contributions and may be attractive to employers that don’t want to commit to a required safe harbor contribution. The tradeoff is that Traditional 401(k) plans are generally subject to annual nondiscrimination testing, which can affect how much highly compensated employees and owners are able to contribute.
How does annual testing differ between these plan designs?
Traditional 401(k) plans are generally subject to annual nondiscrimination testing. Safe Harbor Match and Safe Harbor Non-Elective plans are designed to satisfy certain nondiscrimination testing requirements when applicable safe harbor requirements are met. Alignment(k) Solo generally does not require nondiscrimination testing while the business has no eligible common-law employees, although other annual compliance and filing requirements may still apply.
What happens if I start with Alignment(k) Solo and later hire employees?
A Solo 401(k) is intended for an owner-only business or a business covering the owner and spouse. If you hire employees who become eligible for the plan, the plan may need to transition to another 401(k) design. TRA can help you evaluate the appropriate Alignment(k) Start option as your business grows.
Can I change my plan design later if my business needs change?
Potentially, yes. Your workforce, contribution strategy, and business goals can change over time, and your retirement plan may need to change with them. TRA can help you evaluate whether moving between plan designs makes sense and determine the timing and requirements associated with any change.
How do I know which plan design is the best fit for my business?
The right fit depends on your business type, whether you have employees, your contribution goals, and how much administrative flexibility you want. TRA’s guided implementation process and side-by-side comparison tools are designed to help you evaluate these factors before you get started.
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