SIMPLE IRA Plan A SIMPLE IRA plan provides small employers with a simplified method to contribute toward their employees' and their own retirement savings. Employees may choose to make salary reduction contributions and the employer is required to make either matching or non-elective contributions. Contributions are made to an Individual Retirement Account or Annuity (IRA) set up for each employee (a SIMPLE IRA). Employers with 100 or fewer employees can establish a SIMPLE IRA (cannot maintain another qualified plan). Maximum eligibility is $5,000 in compensation for any two preceding years and is expected to earn $5,000 in current year. is the participant's ownership in the value of his/her retirement account or benefit. Generally in a SIMPLE IRA Plan, all deposits are 100% vested. Required Employer contributions are tax deductible for the employer. Employer can contribute either match of 100% on first 3% of compensation OR 2% (subject to $260,000 salary cap for 2014) non-elective contribution. Employee elective deferrals (pre-tax) are excluded from the employee's income for Federal Income Tax purposes - $12,000 salary deferral limit for 2014; catch-up age 50 and older of $2,500. Employer contributions required Employee contributions are not mandatory Attractive Benefits No discrimination testing is required. Offering a SIMPLE plan can make it easier to attract and retain valuable employees. A SIMPLE plan can assist in providing retirement income for eligible employees. No annual IRS filing requirement. By October 1 st for existing business. As soon as administratively feasible for businesses established after October 1 st. When must Contributions be made? Employer: By tax-filing date plus extensions. Employee: on a deferral basis. Are loans available? No.
SEP IRA Plan A SEP plan allows employers to contribute to traditional IRAs (SEP-IRAs) set up for employees. A business of any size, even self-employed, can establish a SEP. Sole proprietors, Non-Profits, partnerships, limited liability corporations (LLC), or incorporated businesses, including subchapter S corporations, may establish a SEP plan. Employees who have worked for employer during any period of three of the last immediately preceding five years; however short. At least 21 years of age. $550 annual compensation. is the participant's ownership in the value of his/her retirement account or benefit. Generally in a SEP plan, all deposits are 100% vested. compensation. Employer contributions are discretionary. Contributions can be up to 25% of each employee s compensation (maximum $52,000 for 2014; $260,000 salary cap). Advantages/Disadvantages Employer contributions only (no employee deferrals or catchup contributions allowed). 100% on all Employer contributions. Employer contributions are discretionary. Generally no filing requirements. By tax filing date plus extensions. When must Contributions be made? Employer contributions must be made by tax-filing date plus extensions. Are loans available? No.
Solo 401(k) Plan A solo 401(k) is a normal 401(k) plan combined with a profit-sharing plan. A Solo 401(k) Plan can be implemented only by self-employed individuals or small business owners who have no other full-time employees (unless the other employee is a spouse). Sole proprietors, partnerships, limited liability corporations (LLC), or incorporated businesses, including subchapter S corporations, may establish a Solo 401(k) plan. is the participant's ownership in the value of his/her retirement account or benefit. Generally in a solo 401(k), all deposits are 100% vested. compensation. Employee elective deferrals (pre-tax) are excluded from the employee's income for Federal Income Tax purposes - $17,500 salary deferral limit for 2014; catch-up age 50 and older of $5,500. Roth feature is available. Total contributions to a participant s account, not counting catch-up contributions, cannot exceed $52,000 for 2014. The employer may elect to provide a Discretionary Profit Sharing contribution (0% to 25% of eligible plan compensation). Attractive Benefits No contribution or discrimination testing is required. Protection from claims of creditors. Distributions By fiscal year-end (12/31 for calendar year plan). When must Contributions be made? By tax-filing date plus extensions. Are loans available? Loans are optionally available.
Traditional 401(k) Plan A traditional 401(k) Plan allows eligible employees to contribute a portion of their salary to a retirement plan. Employers may elect to contribute either a matching or profit sharing contribution on behalf of all eligible employees. Sole proprietors, partnerships, limited liability corporations (LLC), or incorporated businesses, including subchapter S corporations, may establish a 401(k) plan. May allow 21 years of age or less, one year of service or less (1,000 hours in one year). Union employees and non-resident aliens who have no U.S. source of income may generally be excluded from coverage. is the participant's ownership in the value of his/her retirement account or benefit. All employee contributions are 100% vested immediately. The employer may choose a vesting schedule on employer profit sharing or matching (non-safe harbor) contributions of either immediate, cliff or a graded schedule up to 6 years. compensation Employee elective deferrals (pre-tax) are excluded from the employee's income for Federal Income Tax purposes. $17,500 salary deferral limit for 2014; catch-up age 50 and older of $5,500. Roth feature is available. Total contributions to a participant s account, not counting catch-up contributions, cannot exceed $52,000 for 2014. The employer may elect to provide a matching or Employer Profit Sharing contribution of up to 25% of eligible compensation. Attractive Benefits for Employees Offering a 401(k) plan can make it easier to attract and retain valuable employees. A 401(k) plan can assist in providing retirement income for eligible employees. Designated Roth Contributions area allowed in traditional 401(k) Plans. Distributions are permitted upon death, disability, retirement or termination of employment Loans are available. Tax Deferred growth potential is possible. Any investment earnings grow tax deferred IRS and DOL reporting required (Contact RPC for details on Form 5500 and applicable By fiscal year-end (12/31 for calendar year plan).
Profit Sharing Plan A profit sharing plan is a retirement plan in which contributions are made by the employer (although salary deferrals and matching contributions are available). Several allocation methods are available: Integrated-- Highly compensated employees earn more of an allocation rate because of the factors included with Social Security Taxable Wage Base Non-Integrated/Pro Rata-- All participants receive the same percentage allocation based on compensation Age-weighted---Older participants receive higher rates of contributions New-comparability-- Groups of employees may receive different allocation rates Sole proprietors, partnerships, limited liability corporations (LLC), or incorporated businesses, including subchapter S corporations, may establish a 401(k) plan May allow 21 years of age or less, one year of service or less (1,000 hours in one year) Union employees and non-resident aliens who have no U.S. source of income may generally be excluded from coverage is the participant's ownership in the value of his/her retirement account or benefit. o The employer may choose a vesting schedule on employer contributions of either immediate, cliff or a graded schedule up to 6 years. compensation until withdrawn The employer may elect to provide a Discretionary Profit Sharing contribution (0% to 25% of eligible plan compensation) By tax-filing date plus extensions
Safe Harbor 401(k) Plan 401(k) Safe Harbor Plan allows plan sponsors to fundamentally "buy" their way out of certain discrimination tests to avoid penalties. Safe Harbor Plans allow the highly compensated individuals and/or Owners to maximize their benefit in plans with consequently lower participation level. Sole proprietors, partnerships, limited liability corporations (LLC), or incorporated businesses, including subchapter S corporations, may establish a 401(k) plan. May allow 21 years of age or less, one year of service or less (1,000 hours in one year). Union employees and non-resident aliens who have no U.S. source of income may generally be excluded from coverage. is the participant's ownership in the value of his/her retirement account or benefit. All employee and employer Safe Harbor matching or non-elective contributions are 100% vested immediately. A vesting schedule on the Employer Profit Sharing portion is permissible. compensation. Employee elective deferrals are excluded from the employee's income for Federal Income Tax purposes. The employer may elect one of the following matching or non elective formulas to satisfy IRS "Safe Harbor" requirements: Base formula: 100% of deferrals up to 3% of compensation plus 50% of deferrals on the next 2% of compensation. Enhanced formula: 100% of deferrals up to 4% of compensation. Non-elective formula: at least 3% of compensation for all eligible participants. Attractive Benefits for Employees Offering a 401(k) plan can make it easier to attract and retain valuable employees. A 401(k) plan can assist in providing retirement income for eligible employees. Limited protection from claims of creditors. Designated Roth Contributions are allowed in Safe Harbor 401(k) Plans. Rollovers for other Qualified Plans are permitted. Distributions are permitted upon death, disability, or termination of employment. Loans are available. Safe Harbor Notice (Contact RPC for details on annual notice to employees).
403(b) Plan (ERISA) These tax-deferred plans are designed for employees of public schools, colleges and universities, and churches. Employees of certain tax-exempt, non-profit organizations, such as charities and some hospitals, also may participate in a 403(b) retirement plan. Certain discrimination testing is required; however top heavy testing is eliminated. For employee deferrals, option to participate generally must be offered to all eligible employees (except certain student employees and employees who work less than 20 hours per week or are contributing less than $200/year). For employer contributions, may allow 21 years of age or less, one year of service or less. is the participant's ownership in the value of his/her retirement account. The employer may choose a vesting schedule on employer contributions of either immediate, cliff or a graded schedule up to 6 years. Roth feature is available. Total contributions to a participant s account, not counting catch-up contributions, cannot exceed $52,000 for 2014. Special catch-up provisions may increase the contribution limit. 403(b) contributions are made on pre-tax basis which can greatly reduce your tax bill. Employer Contributions The employer may elect to contribute on a match basis or a straight percentage of pay for all eligible employees. Attractive Benefits for Employees Offering a 403(b) plan can make it easier to attract and retain valuable employees. A 403(b) plan can assist in providing retirement income for eligible employees. Rollovers from any qualified plan or IRA are accepted. Designated Roth Contributions are allowed in traditional 403(b) Plans. Distributions are permitted upon death, disability, retirement or termination of employment. Loans are available. Limited protection from claims of creditors.
457 Plan These tax-deferred plans are designed for employees and independent contractors of state and local government units, and certain employees and independent contractors of tax exempt organizations, except steeple churches. Government Plans- Anyone the employer allows is eligible. Non-Profit Plans- Only a select group of top management or Highly Compensated Employees. is the participant's ownership in the value of his/her retirement account. There may be a vesting schedule of up to 6 years. Tax-deferred growth potential is possible. Any investment earnings grow tax-deferred 457 contributions are made on a pre-tax basis which can greatly reduce your tax bill. Employer Contributions The employer may elect to contribute on a match basis or a straight percentage of pay for all eligible employees. Attractive Benefits for Employees Offering a 457 plan can make it easier to attract and retain valuable employees. A 457 plan can assist in providing retirement income for eligible employees. Rollovers to and from any Qualified plan or IRA are accepted for government plans. Distributions are permitted upon death, disability, retirement, termination of employment or unforeseeable emergency. Loans are available. Protection from claims of creditors for governmental plans. Can be funded without regard to other retirement plans maintained by employer. No 10% penalty for withdrawal before age 59 1/2.