Plan Types

 

401(k) Plans make it easy and convenient for employees to save for retirement and lower income taxes. They are one of the most common employee benefits in America today.

 

Overview of 401(k) Plans

401(k) Plans offer great benefits to employers and employees and can be implemented for minimal costs.
  • Employee Pre-Tax and Roth Salary Deferrals
  • Salary Deferrals of up to $19,000 ($25,000 if Age 50)
  • Participant-Directed Investment Options
  • Plan Features Can Be Customized to Meet Employer Goals
  • Matching and Profit Sharing Contribution Options
  • Loans and In-Service Withdrawal Options

Traditional 401(k) Plans

Traditional 401(k) Plans can be a great benefit for employers wishing to provide a broad-based employee benefit.
  • Often No Required Employer Contributions
  • Discretionary Employer Contribution Options
  • Owner Contributions Can Be Limited with Low Participation
  • Ability to Amend Plan in the Future as Needs Change
  • Employer Contributions Can Be Subject to Vesting Schedule
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Safe Harbor 401(k) Plans

Safe Harbor 401(k) Plans reduce complexity and maximize owner and highly compensated employee contributions.
  • Not subject to ADP and ACP Tests
  • Eliminates Refunds to Owners and Highly Compensated
  • Mandatory Matching or Non-Elective Profit Sharing
  • Employer Contributions are 100% Vested
  • Can be Amended in the Future as Plans Change
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Automatic Enrollment Plans

Automatic Enrollment Plans maximize plan participation and have been proven to significantly increase retirement readiness.
  • Participants are Automatically Enrolled Unless They Opt Out
  • Starting Salary Deferrals Are Defined (generally 3% of more)
  • Can Increase Deferrals Each Year by Stated Percentage
  • Must Choose or Define Default Investment Option
  • Certain Designs are “Safe Harbor” and Eliminate ADP Testing
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