Traditional small business 401(k)s are exactly as you'd expect, with features like employer contributions that become vested over time and employee contributions that are vested immediately. They can be either opt-in, meaning the employee has to elect to open the 401(k) and start contributions, or opt-out, meaning the employee is automatically enrolled unless otherwise specified.
Traditional 401(k) plans require annual testing to ensure they do not discriminate in favor of more highly compensated employees. Safe Harbor 401(k)s, on the other hand, do not require annual testing, which is why they are often the choice of very small businesses that must keep their retirement plans simple. They do require employer contributions, and all contributions are 100% vested immediately. Otherwise, they behave just the same as any 401(k).
Related investing topics