Retirement Plans

The table below shows the limits established by the U.S. government for employer/employee contributions towards various popular retirement plans.

Account Description

Small business owners can make tax-deductible contributions with this flexible plan that is easy to set up and maintain.

If you have employees, you may be required to contribute for them as well.

As a small business owner with no employees, you may be able to contribute more than other retirement plans.

As an employer, you can offer a salary deferral plan for your employees easily and affordably.

A flexible plan offering the highest level of employee pre-tax contributions, a wide range of employer contribution options, and an optional loan provision.

Flexible plans with variable contribution options designed to reward long-term employees with tax-deferred growth - including an optional loan provision.

Eligibility to Contribute

You can contribute at any age if you are self-employed or a small business owner.

You can contribute at any age if you are self-employed, a spouse or a business partner.

As an employer you can contribute for yourself and your employees at any age.

Works well for companies with 25 or fewer employees.

As an employer you can contribute for yourself or your employees at any age.

Works well for companies with 25 or more employees who want to start a new plan or transfer an existing plan.

As an employer you can contribute for yourself or your employees at any age.

Companies of any size can offer this plan.

Maximum Annual Contribution

2006 tax year: As a small business owner you can contribute up to 25% of your compensation or $44,000 - whichever is less.

2007 tax year: As a small business owner, you can contribute up to 25% of your compensation or $45,000 – which ever is less

If you have employees, you may be required to contribute for them as well.

May use a combination of salary deferral and profit sharing contributions. 2007 tax year:
- Profit Sharing: Up to 25% of compensation or $45,000
- Salary deferral: Up to 100% of compensation or $15,500 ($20,500 if over age 50)
- Combination may not exceed $45,000 or ($50,000 age 50 and older).

Employer (Required): Either dollar-for-dollar matching up to 3% of compensation, or 2% of compensation to all eligible employees.

For tax year 2007
Employee: up to 100% of compensation or $10,500 ($13,000 age 50 and older).

Employer: Profit sharing and match: For tax year 2007: Up to 25% of compensation or $45,000 including employee contributions.

Employee: Up to 100% of compensation or $15,500 ($20,500 age 50 and older).

Combination may not exceed $45,000 or if age 50 and older, $50,000.

Employer: Up to 25% of compensation or $44,000 in 2006/$45,000 in 2007.

Profit sharing plans allow you to vary the contribution rate each year.

A money purchase plan has a fixed contribution requirement that your business chooses when your plan is started. This contribution is required each year.

Tax-Deductible Contributions

As a small business owner you can deduct your contributions for yourself and your employees from your company's federal taxable income.

As a small business owner you can deduct your contributions for yourself and your partner from your company's federal taxable income.

Business owners may choose to allow a Roth 401(k) salary deferrals within their plan.

Employers can deduct contributions from federal taxable income.

Employees can make pre-tax contributions.

Employers can deduct contributions from federal taxable income.

Employees can make pre-tax contributions.

Employers may choose to allow Roth 401(k) salary deferrals within their plan.

Employers can deduct contributions from federal taxable income.

Types of Investments

Stocks, bonds and mutual funds available through any qualified Investment firm with IRAs.

Savings accounts and CDs (Time Accounts) available through any qualified Investment firm (should be FDIC-insured IRAs)

Thousands of mutual funds from many well-known fund families available through any qualified Investment firm.

Stocks, bonds and mutual funds available through any qualified Investment firm who offer SIMPLE IRA's

Mutual funds from many well known fund families.

Stocks, bonds and mutual funds available through any firm who offers investment Profit Sharing or Money Purchase Plans.

Withdrawal Penalties

10% IRS early withdrawal penalty if withdrawn before age 59 1/2 unless exception applies. See SEP details

10% IRS early withdrawal penalty if withdrawn before age 59 1/2 unless exception applies. See Individual 401(k) details

25% IRS early withdrawal penalty during the first two years of the account. 10% thereafter if withdrawn before age 59 1/2 unless exception applies. See SIMPLE details

10% IRS early withdrawal penalty if withdrawn before age
59 1/2 unless exception applies. See 401(k) Plan details

10% IRS early withdrawal penalty if withdrawn before age
59 1/2unless exception applies. See Profit Sharing details

Required Withdrawals

Must begin at age 70 1/2

See Details

SEP IRA (Simplified Employee Pension IRA)

Individual 401(k)

SIMPLE IRA

401(k) Plan

Profit Sharing & Money Purchase Plans