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SEP IRA |
Simple IRA |
401(k) Plans |
Profit Sharing & Money Purchase Plans |
Defined Benefit |
| Account Description |
A flexible plan allowing small business owners to make tax-deductible contributions. Contributions must also be made for eligible employees. |
As an employer, you can offer a salary deferral plan for your employees easily and affordably. |
A flexible plan offering the highest level of employee pre-tax contributions, a wide range of employer contribution options, and an optional loan provision. |
Flexible plans with variable contribution options designed to reward long-term employees with tax-deferred growth, includes an optional loan provision. |
The company is responsible for contributions and a committee oversees the investments. |
| Maximum Contribution |
Business owners can contribute up to 25% of compensation or $46,000, whichever is less. |
Employer required: either dollar-for-dollar matching up to 3%, or 2% to all eligible employees. Employee: up to $10,500 ($13,000 if over age 50). Combination may not exceed $46,000 ($51,000 if over age 50). |
Employer: up to 25% or $45,000 including employee contributions. Employee: up to $15,500 ($20,500 if over age 50). Combination may not exceed $46,000 ($51,000 if over age 50). |
Employer: up to 25% or $46,000. Profit sharing allows the combination to vary each year. Money purchase plans have a fixed contribution that is chosen when the plan is started and is required each year. |
Actuarially determined contribution. |
| Eligibility to Contribute |
Anyone with self-employed income. Employees include anyone at least age 21 who worked three years and received at least $450 in the current calendar year. |
Must be offered to all employees who have earned at least $5,000 in any prior two years and are reasonably expected to earn at least $5,000 in the current year. |
Employees at least age 21 with one year of service or 1,000 hours. |
Employees at least age 21 with one year of service or 1,000 hours. |
Employees at least age 21 with one year of service or 1,000 hours. |
| Tax Deductible Contribution |
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Employees can make pre-tax contributions |
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| Contributions may be deducted from the company's federal taxable income. |
| Early Withdrawal Penalty Before Age 59 ½ |
10% |
10% or 25% if less than two years since beginning participation. |
10% |
10% |
10% |
| Required Withdrawals |
Generally must begin at age 70 ½. |