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Product1

401(k)

 
Product2

Profit Sharing

 
Product3

Defined Benefit

 



Definition: A 401(k) plan is a defined contibution plan in which all contributions to the  plan are made by the employee out of their income.  The employee bears the investment risks.

Definition: A profit sharing plan  is a defined contribution plan in which contributions to the plan are made by the employer out of their profits.  The employee bears the investment risks.

Definition: A defined benefit plan is a plan in which benefits are given to the employee upon retirement. The employer bears all investment risks.


Specifications

Who can establish?

Corporations, Sub-chapter S, Self-Employed, Sole Proprietorships, Partnerships, Non-profit

 

Maximum Eligibility

Two years of service with employer (typically 1,000 hours per year) with immediate vesting.

At least 21 years of age.

For deferrals, maximum service is one year.

 

Are Contributions Mandatory?

No

 

Contribution Limits - Employer

The employer's current-year deduction is limited to deferrals plus 25% of compensation paid to all eligible participants. Allocation limited to lesser of 100% of compensation or $49,000 per participant.

 

Contribution Limits - Individual

$16,500 salary deferral limit under IRC Section 402(g)

 

Catch-up Contributions for Workers Age 50 and Older

$5,500

 

Who Directs Investments?

Employer/Trustee or plan may allow individual direction

 


Specifications

Who can establish?

Corporations, Sub-chapter S, Self-Employed, Sole Proprietorships, Partnerships, Non-profit

 

Maximum Eligibility

Two years of service with employer (typically 1,000 hours per year) with immediate vesting.

At least 21 years of age.

 

Are Contributions Mandatory?

No

 

Contribution Limits - Employer

25% of participating payroll. Allocation limited to lesser of 100% of compensation or $49,000 per participant.

 

Contribution Limits - Individual

No pre-tax employee contributions. Plan may allow after-tax voluntary employee contributions.

 

Catch-up Contributions for Workers Age 50 and Older

N/A

 

Who Directs Investments?

Employer/Trustee or plan may allow individual direction

 

Specifications

Who can establish?

Corporations, Sub-chapter S, Self-Employed, Sole Proprietorships, Partnerships, Non-profit

 

Maximum Eligibility

Two years of service with employer (typically 1,000 hours per year) with immediate vesting.

At least 21 years of age.

 

Are Contributions Mandatory?

Yes

 

Contribution Limits - Employer

Based on actuarial assumptions ($195,000 annual benefit cap for a life annuity payable at age 62 with ten years of credited participation.)

 

Contribution Limits - Individual

No pre-tax employee contributions. Plan may allow after-tax voluntary employee contributions.

 

Catch-up Contributions for Workers Age 50 and Older

N/A

 

Who Directs Investments?

Employer/Trustee