- 401(k) - Here is a plan that works for employers looking to give employees the ability to fund for their own retirement. This plan allows both employer and employee contributions. The current annual limit on employee deferrals is $16,500 for the 2009 plan year. This plan requires testing. However, Safe Harbor aspects can be added to give employers options to automatically pass tests.
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Safe Harbor 401(k) - As mentioned we can design your 401(k) to have special safe harbor features, which allow the employer to maximize contibutions, avoid special IRS testing, and keep overhead low.
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Defined Benefit - This is another form of pension plan primarily used by employers looking for larger contribution deductions. A typical profile for this plan will be an owner, who has steady compensation, needing to shelter more than $49,000 for 2009 and is willing to commit to mandatory employer contributions. Employers are able to target an amount needed for retirement. Contributions could range up to a $110,000 per year for older individuals with higher pay and often the contributions can be up to 100% of pay for those on the lower end of the pay scale. Great benefit for employers with owners who are older and with younger employees.
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Profit Sharing (PS) - Works best for employers looking to fund their retirement plans without the mandatory funding requirement. This gives the employer the flexibility to decide on a yearly basis if they want to fund their plan. Employer deductions range from 0 to 25% of total eligible compensation. This plan can also be integrated with the social security wage base, which benefits the highly compensated.
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PS Age Weighted - For those employers looking for the flexibility a profit sharing provides, while funding higher amounts for older key employees, this is the plan for you. The formula in this plan gives weight to those employees who are older and have a higher rate of pay. Works great for older, highly compensated employers with younger, lower paid employees. Deductions for employer contributions range from 0 to 25% of eligible compensation.
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PS New Comparability/Rate Group - Provides the latest technology available to help employers target groups of employees at different contribution levels. This is a profit sharing plan giving the employer flexibility funding. For example, a company may wish to contribute 15% of pay for Owners, 6% of pay for clerical staff and 5% of pay for janitorial staff. The groups are classified in different ways to allow for the different contribution levels while still ensuring the plan remains nondiscriminatory based on the definitions provided by the Internal Revenue Service.
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Money Purchase - This is the traditional pension plan used to fund retirement benefits at a stated percentage of compensation. For example, a plan is normally set up to fund for 10% of total eligible compensation. Deductions range from 0 to 25% of eligible compensation. This type of plan requires mandatory employer contributions. It can also be integrated with the social security wage base, which benefits the highly compensated.
Many of these plans can be combined and have different aspects and parameters. Please contact us today so that we can give you the personalized attention you need and design a perfect plan for your company.
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