| Account Description |
Flexible plans with variable
contribution options designed to reward long-term
employees with tax-deferred growth - including an
optional loan provision.
Many investment firms offers a wide range of plans so
you can get the retirement plan services you need for
your business.
A money purchase plan has a fixed contribution
requirement that your business chooses when your plan is
started. Your business must then make that same
contribution percentage each year regardless of your
company's profits.
In contrast, a profit sharing plan offers more
flexibility in determining annual contribution amounts.
You decide how much you want to contribute each year -
you can even skip years if you need to.
|
| Eligibility to Contribute |
- 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 |
- Employer: Up to 25% of
compensation or $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 |
Employers can deduct contributions
from federal taxable income. |
| Taxation of Earnings and Withdrawals |
Contributions and earnings are taxed
as ordinary income when withdrawn. |
| Types of Investments |
Stocks, bonds and mutual funds
available through any investment firms brokerage
account. |
| Withdrawal Penalties |
10% IRS early withdrawal penalty if
withdrawn before age 59 ½ unless exception applies.
Exceptions:
- Normal retirement age
- Separation of service after five years and
reaching age 55
- Death
- Disability
- Substantial equal periodic payments over life
expectancy
- Rollover to an IRA
- Qualified military reservist
|
| Required Withdrawals |
Must begin at age 70 1/2. |
| Deadline to Set Up and Fund |
- Plan must be established be the last day of the
business’ fiscal year.
- Contributions may be made up through the
business tax filing date (plus extensions).
|
| Commissions and Fees |
Varies by investment firm. |
