Other than owners and their spouses, are there any common-law employees who have or are likely to work at least 1,000 hours during a calendar year?

 

To continue click the answer that best describes your business.

  • Yes, we have common-law employees.

    We are looking for a one time tax-deduction. Afterwards contributions would be rare if any.Employers should intend a qualified retirement plan to be permanent when established. Retirement plans also have ongoing reporting and administrative costs. We do not recommend establishing a plan for a one-time tax savings.We wish to be able to make discretionary contributions each year based on our profit for that year. An annual per-participant contribution limit of up to $53,000 is sufficient for our needs.Do you wish to allow participants to deposit a portion of their pay into the plan in the form of 401(k) elective deferrals? No, we would not like to allow deferrals.Which of these statements best describes your goals for this plan? We wish to contribute to our employees' retirement savings.Traditional Profit Sharing Plans Currently the Profit Sharing plan is one the most popular retirement plans. A profit sharing plan offers the greatest flexibility and variety of options, including the ability to add a 401(k) salary deferral provision ( i.e., a 401(k) Plan). In a profit sharing plan, the employer may make tax-deductible contributions each year for their employees (owners are also considered employees). Contributions to profit sharing plans are not required from year to year and the amount of the contribution is generally at the discretion of the employer. Each participant shares in the allocation of the contribution based on a formula which is defined by the plan’s pre-established rules (the plan document). A participant’s share of the contribution is based on their salary. The plan may also take into account other factors, such as the age of the participant, when allocating the contribution. Profit sharing plans have an annual per-participant contribution limit of $53,000. The amount of the contribution that is tax-deductible for the employer is limited to 25% of the gross annual salaries of all plan participants. Download More Information We wish to contribute to our employees' retirement savings. We wish to provide different levels of contributions based on job classifications or similar business distinctions (such as owners, management, etc.).New Comparability Profit Sharing Plans This is a Profit Sharing Plan that has pre-established allocation groups written into the plan document (such as Owners, Management, and All Others). As in all profit sharing plans, the contribution each year is entirely discretionary. The New Comparability method gives even further control to the plan sponsor by allowing different contribution percentages to be given to each group as long as complex non-discrimination tests are passed. For example, 20% of pay to the owners group, 8% to the management group, and 5% to all others. This type of plan gives the greatest amount of control to the employer. Who is a New Comparability plan right for? • Businesses of any size seeking the greatest control over the allocation of employer contributions. • Businesses of small to moderate size (such as Doctors or Dentists) where significantly greater contributions for a select group are desired.  Download More Information  Yes, we would like to allow deferrals.Which of these statements best describes your goals for this plan? We would like to sponsor a retirement plan that attracts and helps retain employees. The retirement savings of “highly compensated employees” (those who are owners or earn more than $120,000, in the prior year) is not an important consideration.Traditional 401(k) Plans In its traditional form, a 401(k) plan is a Profit Sharing plan that also allows employees 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 paid only when the monies are withdrawn from the plan. 401(k) plans are attractive to younger employees and serve as an effective recruiting tool. In a deferral-only 401(k) plan, the maximum annual contribution is $18,000 ($24,000 if the participant is age 50 or older by plan year end). In addition to Employer Profit Sharing contributions, 401(k) plans may also allow for an employer match on employee salary deferrals. When this is done the plan offers not only employee pre-tax contributions but also employer tax-deductible contributions. In a 401(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). Who is a traditional 401(k) plan right for? 401(k) plans are extremely flexible and efficient retirement plans. They have favorable applications for a wide spectrum of businesses. A 401(k) plans is appropriate for: • Businesses seeking to provide a low-cost employee benefit and recruitment tool. • Businesses who want employees to share in the cost of funding their retirement savings. Traditional 401(k) plans are generally not favorable to “highly compensated employees” (these are owners and those making in excess of $120,000). If this is an important consideration, then your company may be best suited for a Safe Harbor 401(k) or a “DASH” 401(k). We would like to sponsor a retirement plan that attracts and helps retain employees. It is important that highly compensated employees be able to use the plan effectively.Safe Harbor 401(k) Plans A traditional 401(k) plan is generally not favorable to “highly compensated employees” (owners, their immediate family members, and those making in excess of $120,000). The employee deferrals usually require testing to ensure the plan is non-discriminatory. This testing links the deferrals of those who are considered highly compensated employees with those who are not. In most cases this testing severely limits the amounts the highly compensated employees may defer. The solution to the problem is called a “Safe Harbor." By promising a certain guaranteed employer contribution each year to the plan participants, the plan is exempt from testing employee deferrals. This exemption allows all participants the option to defer the maximum allowable amount. The guaranteed employer contribution is 3% of pay or a match of up to 4% of pay. Who is a Safe Harbor 401(k) plan right for? •   Small-to medium-sized businesses where the owners or management wish to save for retirement but are concerned about the cost effectiveness of the plan. •   Businesses whose “highly compensated employees” wish to make substantial 401(k) deferrals. Another example of a Safe Harbor 401(k) is the “DASH” plan. This combines the benefits of the Safe Harbor 401(k) feature with a New-Comparability Profit Sharing Plan.  Download More Information We want the ability to benefit specific individuals to a greater degree and to do so in the most cost-efficient manner as possible.DASH 401(k)  A Double Advantage Safe Harbor or “DASH” plan combines the benefits of aSafe Harbor 401(k) with a New-Comparability Profit Sharing Plan. The “DASH” plan allows all participants to make the maximum allowable deferral each year. The plan also allows the employer to make targeted tax-deductible profit sharing contributions. This is the plan of choice for plan sponsors who wish to maximize the individual contributions to a select group (owners, management, etc.) and minimize employee cost. Who is the “DASH” plan right for? •  Small-to medium-sized businesses where the owners or management wish to  maximize their retirement savings but are concerned about the cost effectiveness of the plan. •   Businesses that wish to reward specific classes of employees (i.e., management). Download More Information     We wish to guarantee a benefit for our employees each year. We are able to commit to a required contribution each year to fund the plan. An annual per-participant contribution limit of up to $53,000 is sufficient for our needs.Traditional Profit Sharing Plan In the past, a plan called a Money Purchase Plan was the vehicle used when a guaranteed contribution was desired.  For example: 5% of annual salary each year.  The formula for determining the contribution was defined in the plan document.  Once a year had started and participants had met the requirements to receive an allocation, the employer was required to make the contributions. New IRS rules have increased the tax-deductible limits to traditional profit sharing plans to now be the same 25% of gross annual salaries that previously was available only under a money purchase plan. Now a traditional profit sharing plan can be designed to accomplish the same goals.  But because contributions would not be totally discretionary, these plans are much less flexible and therefore much less attractive to most plan sponsors.  Currently their application is generally limited to those employers with a need to guarantee a specific contribution amount.  An example of this would be an employer who has a collective bargaining agreement with a union that guarantees the union employees a specific retirement amount each year.However, a profit sharing can also be designed to also allow for discretionary contributions along side of this guaranteed contribution.  If the guaranteed level is set at less than 25% of eligible compensation, a discretionary contribution could be available. The individual annual limits to a Traditional Profit Sharing Plan is $53,000.  The amount of contribution that is tax-deductible for the employer is limited to 25% of the gross annual salaries of all plan participants. We wish to guarantee a benefit for our employees at retirement. We are able to commit to a required contribution each year to fund the plan. We are interested in contributions greater than $53,000.Which of these statements best describes your goals for this plan? We are a small company seeking to maximize tax deductions.Fully Insured Plans A Fully Insured plan is a Defined Benefit Plan and in most respects they are the same. The major difference between the two is that a Fully Insured plan is required to have all plan assets invested with an insurance company. The returns on these investments are guaranteed. However, the returns are generally lower than the return one generally can expect from other investment types. What are some of the benefits of a Fully Insured plan? • Because the investment results are assumed to be lower, these plans generate very large deductible contributions. • No market risk; the investment results are guaranteed.* • Administrative cost savings as an actuarial certification is not required. Who is a Fully Insured plan right for? • Small businesses seeking large tax deductions who have few (if any) employees other than the owners. • Business that have stable and predictable income. • Owners that are risk averse and seek guaranteed benefits without market volatility.  Download More InformationDownload More Information * Guarantees are based on the claims-paying ability of the issuing insurer We are interested in a retirement plan that helps us attract and retain employees. The tax-deductions are nice as well.Defined Benefit Plans Instead of determining an annual contribution each year, a defined benefit plan promises to pay a specific benefit at retirement. For example: 50% of average compensation for life. Each year the amount of the contribution is determined based on the amount that is necessary to pay the promised retirement benefits. The employer is generally required to make contributions to a defined benefit plan each year. • The maximum annual benefit a participant may receive at retirement is $210,000. • The employer may tax-deduct the entire required contribution each year. Who is a defined benefit plan right for? • Small businesses seeking large tax-deductions. • Businesses seeking to attract and reward long-term employees. Defined Benefit PlansClient BrochureBuild a BetterRetirement Plan We are a small-to medium-sized company seeking a plan that is specifically tailored to benefit select individuals to a greater degree.Cash Balance Plans Cash balance plans are swiftly becoming the plan of choice for small businesses that desire large deductions and benefits following the passage of the Pension Protection Act '06. These plans are often paired with a Safe Harbor 401(k) plan to create a retirement plan program that offers the best of both the defined contribution and defined benefit worlds. A Cash Balance plan, termed a "statutory hybrid" plan, is a Defined Benefit plan that mimics the operate of a New Comparability profit sharing plan. Our cash balance program offers: • Deductible contributions that may exceed 100% of pay• Design flexibility• Guaranteed benefits to participants• Easy to understand and communicate Unlike Fully Insured plans or traditional Defined Benefit plans, a cash balance plan may be designed to better control the cost of the rank-and-file employee benefits. The operative engine that makes this work is often referred to as New Comparability and is very similar to the nondiscrimination testing criteria of profit sharing plans that use this feature. Download More Information 

     

     

     

  • No, we have no common-law employees or we have common-law employees but they neither have nor will ever work 1,000 hours during a year.

    Which of these statements best describes your contribution goals?

    A per-participant annual contribution limit of up to $53,000 is sufficient for our needs.Micro(K)® 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 paid only 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 Download More Information We would like to exceed the $53,000 limit and can commit to making required contributions each year.Defined Benefit Plans Instead of determining an annual contribution each year, a defined benefit plan promises to pay a specific benefit at retirement. For example: 50% of average compensation for life. Each year the amount of the contribution is determined based on the amount that is necessary to pay the promised retirement benefits. The employer is generally required to make contributions to a defined benefit plan each year. • The maximum annual benefit a participant may receive at retirement is $210,000. • The employer may tax-deduct the entire required contribution each year. Who is a defined benefit plan right for? • Small businesses seeking large tax-deductions. • Businesses seeking to attract and reward long-term employees. Defined Benefit PlansClient BrochureBuild a BetterRetirement Plan 

     

     

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