Which Retirement Plan Is Best?

Benefits

• Deemed to pass discrimination testing and automatically meet top-heavy contribution requirements
• Maximum deferrals for highly compensated and key employees
• Employee deferrals up to 100% of compensation or $18,000*
• Participants age 50 or older can defer an additional $6,000*
• Discretionary employer contributions
• Options available – loans, vesting, hardship withdrawals
• Protection from creditors
• Participants may “self-direct” investments

Limitations

• Annual IRS Form 5500 Tax Return
• Moderate administrative detail
• Requires annual election and notice

Employee Participation – Maximum Requirements

• Age 21 with one year of service – 1,000 hours

Benefits

• Contributions are discretionary and deductible to Employer
• Flexibility in plan design
• Plan expenses deductible to the employer
• Individual contribution limit, lesser of 100% / $53,000*
• May combine with a 401(k) plan
• Other options – vesting, loans and rollovers
• Protection from creditors
• SEP-IRA may be rolled in
• Participants may “self-direct” investments

Limitations

• Annual IRS Form 5500 Tax Return
• Moderate administrative detail
• Salary deferral not allowable

Employee Participation – Maximum Requirements

• Age 21 with one year of service, then vesting schedule can apply
• Age 21 with two years of service, then 100% vested at entry

Benefits

• Lorem ipsum, in graphical and textual context,
• Latin “dolorem ipsum” roughly translated as 
• Lorem ipsum, in graphical and textual context,
• Latin “dolorem ipsum” roughly translated as 
• Lorem ipsum, in graphical and textual context,
• Latin “dolorem ipsum” roughly translated as 
• Lorem ipsum, in graphical and textual context,
• Latin “dolorem ipsum” roughly translated as 
• Lorem ipsum, in graphical and textual context,

Limitations

• Lorem ipsum, in graphical and textual context,
• Latin “dolorem ipsum” roughly translated as 
• Lorem ipsum, in graphical and textual context,

Employee Participation – Maximum Requirements

• Lorem ipsum, in graphical and textual context,
• Latin “dolorem ipsum” roughly translated as

Benefits

Same as Profit Sharing above, and:

• Target individuals or groups to maximize contributions
• Maximum employer deduction 25% of compensation
• Individual contribution limit, lesser of 100% / $53,000*
• May combine into a 401(k) plan
• Other options – vesting, rollovers, loans
• Protection from creditors
• SEP-IRA may be rolled in
• Participants may “self-direct” investments

Limitations

• Annual IRS Form 5500 Tax Return
• Significant administrative detail

Employee Participation – Maximum Requirements

• Age 21 with one year of service, then vesting schedule can apply
• Age 21 with two years of service, then 100% vested at entry

Benefits

• Maximize contributions and tax deductions
• May credit service prior to plan inception
• Favorable to older and long tenured employees
• Protection from creditors

Limitations

• Recurring annual contribution
• Annual IRS Form 5500 Tax Return
• Extensive administrative detail
• Actuary advice required
• Lump sum distribution upon retirement

Employee Participation – Maximum Requirements

• Age 21 with one year of service, then vesting schedule can apply
• Age 21 with two years of service, then 100% vested at entry

Benefits

• Simple to establish and maintain
• Contributions deductible to the employer
• Maximum deductible contribution 25% of wages (or up to 20% of Schedule C income)/ up to a maximum of $53,000* Contributions can be made for 2012 up until your tax filing deadline, plus extensions
• Flexible contribution amounts
• No annual IRS Form 5500 Tax Return
• Less administrative detail

Limitations

• Vesting – full and immediate
• No federal protection from creditors
• Must include part-time employees
• No Loans

Employee Participation – Maximum Requirements

• Age 21
• Employed three of past five years
• Compensation at least $600*

*2015 figures. Subject to annual cost of living adjustments. For more information, click here.