PLANS WE SUPPORT
Your Retirement Plan Guides
Depending on many factors, such as:
- the size and type of your business
- your age
- the demographics of your staff
- your typical profitability
- your tax situation
- your goals and aspirations
The right plan for you may go well beyond a 401(k). But how do you know? Our experts will be your retirement plan guide who will lead you through all the different plan types and options to fit the one that fits… you.
Your Retirement Plan Guides
Depending on many factors, such as:
- the size and type of your business
- your age
- the demographics of your staff
- your typical profitability
- your tax situation
- your goals and aspirations
The right plan for you may go well beyond a 401(k). But how do you know? Our experts will be your retirement plan guide who will lead you through all different plan types and options to fit the one that fits… you.
⭘ SCHEDULE A FREE CONSULTATION
and let us guide you
There are numerous types of retirement plans. And each type includes many different and unique design considerations.
Here’s a list of the most common plan types we can choose from to tailor your solution:
There are numerous types of retirement plans. And each type includes many different and unique design considerations.
Here’s a list of the most common plan types we can choose from to tailor your solution:
⭘ SCHEDULE A FREE CONSULTATION
and let us guide you
Traditional 401(k)
The 401(k) plan is the most popular retirement plan. Employees can benefit from a 401(k) plan even if the employer makes no contribution by voluntarily electing to make pre-tax contributions through payroll deductions up to an annual maximum limit. Employees age 50 and older can make additional contributions called Catch-up contributions, up to an annual maximum limit. Employee contributions are 100% vested at all times.
Safe Harbor 401(k)
A Safe Harbor 401(k) plan incorporates specific provisions in the plan design that require certain levels of employer contributions to non-highly compensated employees. These requirements specify minimum employer contributions and 100% vesting of these contributions. By doing so, the plan can eliminate annual nondiscrimination testing. Elimination of nondiscrimination testing means that the highly compensated employees (typically the business owner(s) and more senior employees) can defer up to the annual limit regardless of the amount deferred by non-highly compensated employees.
Solo 401(k)
As the name implies, a Solo 401(k) is a plan which covers just one business owner who has no employees. A Solo 401(k) plan may also cover the business owner’s spouse. While the requirements are the same as any other 401(k) plan, the amount and methodology to determine annual contribution limits is different and requires special care. Also, since there are no employees, the annual nondiscrimination testing does not apply.
Profit Sharing
A Profit Sharing plan is generally the most flexible qualified plan available. Company contributions to a Profit Sharing plan are usually made on a discretionary basis. Each year, the employer determines the amount, if any, to be contributed to the plan. The contribution is usually allocated to employees in proportion to compensation. The contribution may also be allocated using a formula that factors in the amount the employer contributes to Social Security on behalf of each employee. This is called Social Security Integration or Permitted Disparity and typically results in larger contributions for the business owner(s) and employees who receive higher compensation.
New Comparability or Cross-Tested
Sometimes referred to as a cross-tested plan, a New Comparability plan is usually a Profit Sharing plan that is tested for nondiscrimination as though it was a Defined Benefit plan. As a result, certain employees receive much higher contribution allocations than what would normally be permitted by standard nondiscrimination testing. If it fits the overall company strategy, some business owners may find that using a new comparability contribution allocation can maximize contributions for owners and other higher-paid employees while minimizing contributions for all other eligible employees.
Defined Benefit
A Defined Benefit (DB) plan promises participants a specified monthly benefit, payable at the retirement age specified in the plan. DB plans are usually funded entirely by the employer, who is responsible for contributing enough funds to the plan each year to pay the promised future employee retirement benefits, regardless of company annual profits and earnings.
DB: Floor Offset Arrangements
A Floor Offset Arrangement is an advanced strategy that allows business owners to maximize their annual contributions. It is a combination of both a Defined Benefit (DB) plan and Defined Contribution (DC) plan such as a Profit Sharing plan to provide a total benefit. In this combined arrangement, the DB plan provides for a minimum guaranteed benefit – the “floor” benefit – from both plans. Generally, a gross annual benefit is set based on a combination of compensation and years of service and is specified in the DB plan. This gross benefit is then reduced – or “offset” – by the value of employer contributions made to the DC plan. After this reduction, the DB plan funds whatever the net amount remaining, if any.
Cash Balance
A Cash Balance plan is a type of Defined Benefit plan that resembles a Defined Contribution plan. A traditional Defined Benefit plan promises a fixed monthly benefit at retirement that is usually based on compensation and years of service. In a Cash Balance plan, the employee’s benefit is expressed as a hypothetical account balance instead of a monthly benefit, making it look like a Defined Contribution plan.
403(b)
403(b) plans are designed to serve nonprofit businesses in much the same way that 401(k) plans serve for-profit businesses. Many of our nonprofit clients find that a 403(b) plan helps them attract and retain good employees. As in a 401(k), each participating employee can elect to make pre-tax or Roth contributions through payroll deductions. And most employers, wanting to provide an added benefit and encourage employee participation, can match a predetermined amount of an employee’s contribution. While most 403(b) plans do include employee and the employer contributions, the employer is not required to make contributions.
