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Handshake  Plan Types

 

The chart below provides a quick comparison of different types of retirement plans.

 
Plan Type / Typical Client Plan Features and Benefits Employee Contribution Limits
SOLO 401(k) Plan
For Owner-Only Business, including Sole Proprietors, Partnerships with Multiple Owners, and Other Business Entities with No Non-Owner Employees.  Fact Sheet
  • Larger Contributions than SIMPLE Plans
  • Spouses Can Participate
  • Loans Allowed
  • Pre-Tax or Roth Contributions
  • Can Be Paired with a Cash Balance Plan
  • $54,000
  • $60,000 if Age 50
  • 25% Tax Deduction Limit
401k Plan
A basic retirement benefit for employees.  Owners and highly compensated employee contributions may be limited if low employee participation.  Fact Sheet
  • Pre-tax or Roth Contributions
  • Discretionary Employer Contributions
  • Up to 1 Year Eligibility
  • Auto Enrollment Option
  • Vesting Schedules
  • $18,000 Salary Deferral Limit
  • $6,000 Catch-Up Contribution if Age 50
  • Total Contributions of $54,000
  • Total Contributions of $60,000 if Age 50
  • 25% Tax Deduction Limit
Safe Harbor 401k
Great plan for owners and highly compensated employees wanting to maximize contributions and avoid refunds from a failed testing.   Fact Sheet
  • Same as Traditional 401k
  • Not Subject to ADP Testing
  • Requires Fully-Vested Employer Contributions
  • 3% Profit Sharing Contribution, or
  • 4% Matching Contribution
  • $18,000 Salary Deferral Limit
  • $6,000 Catch-Up Contribution if Age 50
  • Total Contributions of $54,000
  • Total Contributions of $60,000 if Age 50
  • 25% Tax Deduction Limit
Profit Sharing Plan
Employers make tax-deductible contributions for employees.  Can be a stand-alone plan or combined with 401k.   Fact Sheet
  • Discretionary Employer Contributions
  • Vesting Schedules
  • Low Setup / Administration Costs
  • Up to 2 Year Eligibility for Stand-Alone Plans
  • $54,000
  • 25% Tax Deduction Limit
  • Higher if part of a 401(k) plan
New Comparability
Targeted contributions to owners, highly compensated employees, or select employee groups.  Can be a stand-alone plan design or combined with 401k.   Fact Sheet
  • Type of Profit Sharing Plan
  • Maximizes Contributions for Owners / HCEs
  • Contributions Targeted to Specified Employees
  • Reduce Funding Costs for Employees
  • $54,000
  • 25% Tax Deduction Limit
  • Higher if part of a 401(k) plan
 
Cash Balance
A hybrid plan design often adopted by employers and business owners seeking to fund much higher contributions than allowed in 401(k) and Profit Sharing Plans.   Fact Sheet
  • Much Larger Contributions
  • Up to $210,000 Annual Benefit
  • Often Paired with 401k Plan / Profit Sharing
  • A Hybrid Plan Design
  • $210 Annual Benefit
Defined Benefit
Allows business owners to fund much higher contributions than allowed in 401(k) and Profit Sharing Plans.  While Cash Balance Plans have become the plan of choice for many companies, Defined Benefit Plans may still be a good option.    Fact Sheet
  • Funding Limits Similar to Cash Balance
  • Guaranteed Retirement Benefit for Employees
  • Employer Bears Funding Liability for Benefit
  • Employer Bears Risk for Investment Losses
  • $215,000 Annual Benefit