Which Plan is Right For You?
Profit Sharing Plans
A Micro(k)® plan is similar to a traditional 401(k) plan. A Micro(k)® allows participants to deposit a portion of their pay into the plan in the form of salary deferrals. These deferrals are deposited on a pre-tax basis, and income taxes are only paid when the monies are withdrawn from the plan. In a deferral only Micro(k)® plan, the maximum annual contribution is $18,000 ($24,000 if the participant is age 50 or older by plan year end).
Micro(k)® plans may also allow for employer contributions, such as profit sharing or an employer match on salary deferrals. In a Micro(k)® plan with employer contributions, the maximum total annual contribution an individual participant may receive is $53,000 ($59,000 if the participant is age 50 or older by plan year end).
A Micro(k)® plan differs from a traditional 401(k) in that it applies solely to businesses without eligible common-law employees. The only participants in a Micro(k)® plan may be owners, partners and their spouses. Some of the many benefits include:
• Tax savings
• Cost-effective administration and setup
• Flexible investment options
• Loans may be taken from plan accounts
• No required contributions
Security Administrators, Inc. • 105 Court St. • Binghamton, NY 13901 • 1-877-SAI-BING (724-2464)