Want to get more out of your 401(k) plan for yourself and key employees? Until now, you couldn't, because federal pension rules wouldn't let you reward one person or group of workers more lavishly than others. But sharp-penciled consultants have poked big holes in those rules for 1999, and the result could be one of the most lucrative changes in retirement savings during the past decade.

The changes stem from reforms Congress passed in 1996. Buried within are provisions that allow you to legally sidestep federal tests designed to ensure that lower-paid workers get a square deal from the company pension plan. Sounds craven? Not really. If you do it right, everyone comes out ahead.

As we've noted before, federal rules say pension plans have to be properly balanced so that the top brass doesn't benefit too much more than the lower-level workers. This balance is measured by comparing the two groups with a fiendishly complex formula known as the antidiscrimination test. Don't ask about the math; you don't want to know. Just remember that if your lower-paid employees don't participate enough, your plan will fail this fairness test. And you don't want to fail: The prescribed remedy is (ouch!) reducing or even returning the 401(k) contributions of your top earners until the plan is balanced again.

Unfortunately, about half the plans don't pass because lower-paid workers can't afford to put money aside for retirement, which skews the comparison with high-paid workers. So in 1996, Congress responded by creating two "safe-harbor" options, effective in 1999, that let owners skip the antidiscrimination tests if they offer more generous terms.

FAIL-SAFE SOLUTIONS. Under the first option -- let's call it the matching plan -- employers must match all employee contributions dollar-for-dollar on at least the first 3% of pay, plus 50 cents on the dollar for the next 2%. That's more than most 401(k) plans pay now, and your employees are immediately vested in a tax-deferred account instead of waiting for up to five years. Offer these terms, and voila! You pass the fairness test, regardless of how much your lower-paid employees participate.

The obvious flaw is that lower-paid workers won't sign up because they still can't afford to set aside money. Indeed, some cynical bosses may count on this outcome, gambling that they can hold overall costs to 1% or 2% of payroll, instead of the 4% cost if everyone contributes fully. Our advice: Don't risk it. If you guess wrong about participation, you'll blow a hole in your budget. And squeezing your weakest employees to give yourself a fat raise isn't everyone's idea of good management.

Far more appealing is the second safe-harbor option. You simply put 3% of pay for all eligible employees into their 401(k) accounts, regardless of whether they contribute. The result: All your people get tax-deferred retirement money that vests immediately, your budget is predictable, and you're off the hook for fairness tests. And, unlike the matching option, you'll get an automatic exemption from another federal test that determines whether your plan is "top heavy." Ordinarily, you'd fail if more than 60% of the plan's total assets were held by owners and key employees.

Now for the real payoff: Because you've chosen the 3% plan, the IRS will let you beef up payments to older workers using a method called cross-testing. This rule recognizes that older workers have less time left to save for retirement and thus need more money right now to create an adequate nest egg. To make up for the shortfall, you're allowed to handpick a group of older workers and give them larger 401(k) contributions. Conveniently, of course, owners and key staff tend to be among the oldest employees.

All told, this plan could help you boost 401(k) contributions toward the limit of 25% of a person's salary or $30,000, whichever is less. True, the same ceiling applies to other pension plans -- but now you have a realistic chance of getting there.

This 3%-plus-cross-testing combination was strung together by consultants at Pioneer Investment Management in Boston, who dubbed it a DASH 401(k) -- the "Double Advantage Safe Harbor." But any retirement-services company could copy the idea, says R. Theodore Benna, president of the 401(k) Association in Cross Fork, Pa. "I suspect they won't be the only people jumping all over this," says Benna. "Frankly, this is good where you have a very high-income owner or owners who are looking to take advantage of the $30,000 maximum and do as little as they legally have to to get there."

Granted, there's a whiff of inequity from one version of safe harbor. But you needn't hold your nose. The 3% option, and Pioneer's clever variant, pass the moral smell test.

By Rick Green in New York, with Timothy Middleton in Short Hills, N.J.

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