|
Business owners with few or no employees
Employers who want flexibility in amount contributed annually |
Small companies with 100 or fewer eligible employees
Companies that want to allow employees to make salary deferrals and save tax-deferred for retirement |
Business owners with few or no employees
Businesses that may have variable profits
Businesses that may want additional plan features |
Highly compensated individuals with few or no employees
Those who can contribute $80,000 or more annually for at least five years |
Business owners with no employees (other than a spouse)
Those who want to make big contributions with flexibility in the amount contributed annually |
Businesses of any size who seek a plan permitting higher salary deferrals by employees than other retirement plans
Businesses who need a customized retirement solution |
|
Low-cost, easy to administer
No IRS reporting or annual funding required
Employer must contribute to eligible employee accounts in any year plan is funded |
Easy to administer
No IRS reporting required
Largely funded by employee contributions, but limited employer contribution required |
Discretionary contributions may be made
Requires more setup and administration than certain other plans
Additional features available, such as vesting or waiting periods for participation |
Funding limit based on annual target benefit rather than contribution limits
Assets can be accumulated over a shorter period of time
Requires annual funding commitment |
Offers similar benefits of Traditional 401(k) with less administration required
May permit greater contributions than SEP IRA or profit sharing plan without the funding commitment required by a Personal Defined Benefit |
Funded with elective employee salary deferrals and/or annual employer contributions.
Does not need to be funded annually.
Requires annual filing of Form 5500, and annual testing to determine that the plan is operating under the terms of the IRS rules for qualified 401(k) plans |
|
Up to 25% of compensation (20% if you’re self-employed[1]) or $45,000 for
tax year 2007 ($46,000 for 2008) [2], whichever is less |
Employee: up to 100% of compensation or $10,500[2] (whichever is less) for
each tax year 2007 and 2008[2]. Age 50 and over may make catch-up contribution
of $2,500 for each tax year 2007 and 2008[2].
Employer: Can match employee contributions dollar for dollar up to 3% (maximum
of $10,500[2]) or contribute 2% |
Up to 25% of compensation (20% if you’re self-employed[1]) or $45,000 for
tax year 2007 ($46,000 for 2008[2]), whichever is less |
Calculated by actuary as amount required to fund annual target retirement benefit. Up to $180,000 for tax year 2007 ($185,000 for 2008) |
Up to 20% of self-employment income, plus additional pre-tax salary deferral
of up to $15,500 for each tax year 2007 and 2008[2]. Individuals age 50
or over may make an additional catch-up contribution of $5,000 for each
tax year 2007 and 2008[2].
The maximum combined contribution, including salary deferral cannot exceed $45,000 for 2007 ($50,000 if age 50 or over), or $46,000 for 2008 ($51,000 if age 50 or over). |
Employee: up to $15,500 for 2008. Age 50 or older may make catch-up contribution of $5,000 for tax year 2008.
Employer: up to 25% of participant compensation. Employer plus employee contributions cannot exceed the lesser of 100% of compensation or $46,000 for tax year 2008.
The maximum combined contribution, including salary deferral cannot exceed $46,000 for 2008 ($51,000 if age 50 or over). |
