| |
Individual 401k |
SEP IRA |
Defined
Benefit Plans |
Simple IRA |
| Who is Eligible for this Retirement Plan? |
Self employed individuals with no employees
other than a spouse Sole Proprietors, LLCs, Partnerships, S and
C Corporations
|
Self employed individuals with no
employees or small businesses with employees Sole Proprietors, LLCs, Partnerships, S and C Corporations
|
Self employed individuals or small businesses
owners with 4 or fewer full time employees Sole Proprietors, LLCs,
Partnerships, S and C Corporations
|
Companies with 100 or fewer employees
Sole Proprietors, LLCs, Partnerships, S and C Corporations
|
| Key Retirement Plan Features |
Provides benefits similar to a traditional
401(k) with less administration. May permit greater contributions
than SEP-IRA, SIMPLE IRA or profit sharing plan without the rigid
funding requirement of a Defined Benefit Plan
|
Easy to administer, low-cost No IRS reporting
required
No annual funding required
Employer must contribute to eligible employee accounts in any
year that the plan is funded
|
Provides the maximum allowable tax deductible
retirement plan contribution. |
Easy to administer, low-cost No IRS
reporting required
Largely funded by employee contributions, but limited employer
contribution required
|
| Employee Contributions |
Salary deferrals up to 100% of
compensation up to $15,500 or $20,500 if age 50+ in 2008 |
None |
None |
Up to 100% of compensation up to
$10,500 or $13,000 if age 50+ in 2008 |
| Employer Contributions |
Profit sharing contributions up to 25%
of compensation.
In 2008, employer and employee contributions have a combined
maximum of $46,000 or $51,000 if age 50+ |
100% employer funded
Up to 25% of compensation with a maximum of $46,000 in 2008 |
100% employer funded The annual contribution
is calculated annually by an actuary
Defined benefit plans provide the maximum allowable tax deductible
retirement plan contribution
|
Employer's have a mandatory match and
must select from 1 of 2 matching formulas
Match employee contributions dollar for dollar up to 3% (up to a
maximum of $10,500 or $13,000 if age 50+ in 2008)
A 2% match of employee compensation to all eligible employees
regardless if the employee is electing to defer a portion of
their salary or not (up to $4600 in 2008) |
| Required Administrative Filings and Responsibilities |
Must file IRS Form 5500 when plan assets
are greater than $250,000 |
No employer tax filings |
Annually an actuary makes calculations
to determine the amount that needs to be contributed into the plan
to ensure the target retirement income goal is reached |
No employer tax filings |
| Loan and Withdrawal Information |
Tax free loans are permitted. 50% of the
total 401k value can be borrowed up to a maximum of $50,000. |
Withdrawals prior to age 59 1/2 are permitted,
but may be subject to a 10% penalty plus income taxes |
Hardship withdrawals are not permitted
Loans are available if this feature is elected when the plan is
adopted
Receiving a loan may increase the annual required contribution
|
Withdrawals prior to age 59 1/2 are permitted,
but may be subject to a 25% penalty if taken within the first 2
years of participating in a SIMPLE IRA. Also, an additional
10% penalty may apply for withdrawals prior to age 59 1/2 in addition
to ordinary income taxes |
| Setup Deadlines |
December 31st or fiscal year end |
Personal tax filing deadline if a sole
proprietor plus extensions or the business tax filing deadline if
incorporated plus extensions |
Must be set up by December 31st or fiscal
year end |
Must be established by October 1st |
| More Information |
Learn more about the
Individual 401k. |
Learn more about the
SEP IRA. |
Learn more about the
Defined Benefit Plan. |
Learn more about the
SIMPLE IRA. |
| |
