| Account Description |
A flexible plan offering the highest
level of employee pre-tax contributions, a wide range of
employer contribution options, and an optional loan
provision.
Many investment firms offer an all-in-one bundled
solution including:
- Professional asset management and investment
monitoring
- Recordkeeping
- Compliance
- Participant communications
|
| Eligibility to Contribute |
- As an employer you can contribute for yourself
and your employees at any age.
- Ideal for companies of 25 or more employees who
want to start a new plan or transfer an existing
plan.
|
| Maximum Annual Contribution |
- Employer: Profit sharing and
match: 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.
|
| Tax-Deductible Contributions |
- Employers can deduct contributions from federal
taxable income.
- Employees can make pre-tax contributions.
Your plan may allow you to allocate part or all of your
deferral to a Roth 401(k). Roth 401(k) salary deferrals
are not tax deductible but contributions and earnings
grow tax deferred and may be eligible for income tax
free withdrawals if held for five years and attaining
age 59 1/2. |
| Taxation of Earnings and Withdrawals |
Contributions and earnings are taxed
as ordinary income when withdrawn. |
| Types of Investments |
Thousands of mutual funds from many
well-known fund families. |
| Withdrawal Penalties |
10% IRS early withdrawal penalty if
withdrawn before age 59 1/2 unless exception applies.
Exceptions:
- Normal retirement age
- Separation of service after five years and
reaching age 55
- Death
- Disability
- Rollover to an IRA
- Substantially equal payments made over life
expectancy
- Qualified military reservist
|
| Required Withdrawals |
Must begin at age 70 1/2. |
| Deadline to Set Up and Fund |
- Plan must be established by the last day of the
business' fiscal year. Please note that it may take
up to 90 days to establish a Plan.
- Salary deferral portion of the contribution must
be deducted from paychecks.
- Employer contribution may be made up through the
business’ tax filing due date plus extensions.
|
| Commissions and Fees |
Varies by investment firm. |
