Choosing The Right Plan

Plans

Choosing The Right Plan

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Plan Design is crucial. Three key components must simultaneously be achieved:

  1. Significant corporate tax deduction
  2. Efficient allocation between business owners/partners and staff
  3. Meets overall budgets/cash flow

Which Retirement Plan is Right For You?

Want to make sure you pick the right retirement plan for you and your employees?

As your premier third party administrator, we put together a list outlining the benefits and limitations of each type of plan. Take a look!

For more information, contact PlanPerfect for a quote and analysis to help determine which plan is right for your business.

401(k) Plan

  • Flexible Plan Design
  • 401(k) contributions reduce employee’s taxable income
  • Pre-tax deferrals up to 100% of compensation or $19,000*
  • Participants age 50 or older can defer an additional $6,000*
  • 401k deferrals are ALWAYS 100% vested
  • Participants may “self-direct” investments
  • Payroll-deduction makes it easy to save
  • Loans may be available
  • Rollovers from prior plans available
  • Plan Assets are protected from creditors
  • No required employer contribution

Safe Harbor 401(k) Plan

 

  • Deemed to pass discrimination testing and automatically meet top-heavy contribution requirements
  • Plan assets are protected from creditors
  • Employer contribution required
  • Safe Harbor contribution to eliminate ratio/compliance testing
  • Allows maximum 401k deferrals for highly compensated and key employees
Learn More

Profit Sharing Plans

  • Best suited for companies that want maximum flexibility
  • Employer contributions are discretionary
  • May combine with a 401(k) plan
  • Vesting schedule available
  • Loans allowed
  • Rollovers from other retirement plans available
  • SEP-IRA may be rolled in
  • Participants may “self-direct” investments
  • Plan assets are protected from creditors

Limitations

  • Annual IRS Form 5500SF Tax Return
  • Moderate administration and fees
  • Salary deferrals not allowed
  • Anti-discrimination tests apply
Learn More

Defined Benefit Pension Plan

  • Deductible contribution levels are substantially higher than the Plans listed above
  • Favors older, highly compensated employees
  • Vesting schedule
  • Trustee’s responsible for investment selection
  • Plan assets are protected from creditors

Limitations

  • Recurring annual contribution
  • Annual IRS Form 5500SF Tax Return
  • Extensive administrative detail
  • Actuarial certification required
  • Not good for younger owners / older employees
Learn More

Cash Balance Pension Plan

  • Significant corporate tax deduction
  • Some flexibility in Plan Design
  • Favors older and long tenured employees
  • Compress high contributions into a short time frame
  • Plan assets are protected from creditors

Limitations

  • Recurring annual contribution
  • Annual IRS Form 5500SF Tax Return
  • Extensive administrative detail
  • Actuarial certification required
  • Not good for younger owners / older employees
Learn More

Simplified Employee Pension (SEP)

  • Simple to establish and maintain
  • Contributions deductible to the employer
  • Maximum deductible contribution 25% of wages
  • Flexible contribution amounts
  • No annual IRS Form 5500 Tax Return
  • Less administrative detail
  • Plan assets are protected from creditors

Limitations

  • Employer contribution only
  • Vesting – 100% full and immediate
  • No federal protection from creditors
  • Must include part-time employees
  • No Loans

PlanPerfect: The perfect fit for your retirement plan

If you have any questions or need guidance in choosing the right retirement plan, our team at PlanPerfect is here to help. Reach out to us for personalized advice and expert assistance in creating a plan that meets your financial goals. Contact us today and take the first step toward a secure and fulfilling retirement.