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Traditional
401(k)
Benefits
- Employee pre-tax
deferrals up to 100% of compensation or $15,000 1
- Discretionary employer
profit sharing contributions
- Employee contributions
by payroll deductions
- Possible employer
match for employee contributions
- Available options -
loans, vesting, hardship withdrawals, rollovers
- Protection from
creditors
Limitations
- May prevent maximum
deferrals for key employees
- Anti-discrimination
test applies
- Annual IRS 5500
Report
- Moderate
administrative detail
Employee Participation - Maximum Requirements
- Age 21 with one year
of service - 1,000 hours
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Safe Harbor 401(k)
Benefits
- Employee deferrals up
to 100% of compensation or $15,000 1
- Discretionary
employer contributions
- Employee
contributions by payroll deductions
- Options available -
loans, vesting, hardship withdrawals, rollovers
- Deemed to pass
discrimination test
- May automatically
meet top-heavy contribution requirements
- Protection from
creditors
Limitations
- Annual IRS 5500
Report
- Moderate
administrative detail
- Requires annual
election and notice
- Mandatory employer
contributions
Employee Participation - Maximum Requirements
- Age 21 with one year
of service - 1,000 hours
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Profit
Sharing
Benefits
- Individual deduction
limit, lesser of 100% or $42,000 2
- Maximum employer
deduction 25% of eligible compensation
- Discretionary or
fixed employer contributions
- Other options -
vesting, withdrawals, rollovers, loans
- Protection from
creditors
Limitations
- Annual IRS 5500
Report
- Moderate administrative
detail
- Limited allocation
options
- 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
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Cross-Tested
Profit Sharing
New Comparability
Benefits
- Target individuals
or groups to maximize contributions
- Maximum employer
deduction 25% of compensation
- Individual
contribution limit, lesser of 100% or $42,000 2
- May combine into a
401(k) plan
- Other options -
vesting, rollovers, loans
- Protection from
creditors
Limitations
- Annual IRS 5500
Report
- Extensive
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
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Defined
Benefit Pension
Benefits
- Maximize
contributions and tax deductions
- Annual maximum individual
benefit payable $170,000 3
- May credit service
prior to plan inception
- Favorable to older
and long tenured employees
- Protection from
creditors
Limitations
- Recurring annual
contribution
- Annual IRS 5500
Report
- Extensive administrative
detail
- Actuary advice
required
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
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Cash Balance
Pension - New Plan Only
Benefits
- Maximize
contributions and tax deductions
- Annual maximum
individual benefit payable $170,000 3
- May credit service
prior to plan inception
- Favorable to older
and long tenured employees
- Protection from
creditors
Limitations
- Recurring annual
contribution
- Annual IRS 5500
Report
- 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
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Simplified
Employee Pension
Benefits
- Maximum employer
deduction lesser of 25% or $42,000 2
- Flexible
contribution amounts
- No annual IRS 5500
Report
- Less administrative
detail
Limitations
- No vesting schedule
- No federal protection
from liens
- No hour requirements
Employee Participation - Maximum Requirements
- Age 21
- Employed three of past
five years
- Compensation at
least $450
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SIMPLE IRA
Savings Incentive Match Plan for Employees
Benefits
- Employee pre-tax
deferrals
- Employer matching
contributions
- Structured document
- No annual IRS 5500
Report
- Less administrative
detail
- Satisfies
discrimination/top-heavy testing
Limitations
- Maximum $10,000
employee deferral 1
- Mandatory employer
contribution
- No vesting schedule
- No hour or age
requirement
- Higher withdrawal penalties
than qualified plan
Employee Participation - Maximum Requirements
- Employed past two
years
- Minimum forecasted
annual compensation $5,000
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Notes
- Note 1 - As of 2005,
thereafter inflation adjusted
- Note 2 - As of 2005,
thereafter annually inflation adjusted in $1,000 increments
- Note 3 - As of 2005,
thereafter annually inflation adjusted in $5,000 increments
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All Plans Update - Maximum Benefits and Contribution
Limits
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2008
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2007
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2006
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Elective Deferrals 401(k), others
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$15,500
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$15,500
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$15,000
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Defined Benefit Plans
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$185,000
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$180,000
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$175,000
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Defined Contribution Plans
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$46,000
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$45,000
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$44,000
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Annual Compensation Limit
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$230,000
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$225,000
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$220,000
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Highly Compensated
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$105,000
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$100,000
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$100,000
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SIMPLE Retirement Accounts
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$10,500
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$10,500
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$10,000
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SEP Coverage (Min Wages)
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$500
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$500
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$450
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Social Security Taxable Income
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$102,000
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$97,500
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$94,200
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