| 401 (k) Plans
A 401 (k) is a qualified plan that allows for
employee pre-tax contributions. The value of a 401 (k)
investment grows tax deferred until withdrawn, when
it is taxed as ordinary income
Key Benefits of a 410 (k) Plan:
-
Permits pre-tax salary
deferral contributions
-
Due to complicated discrimination
testing and tax reporting, third party administrative
services are required
-
Employer contributions
are tax deductible
-
Employer matching and Profit
Sharing contributions are optional
-
Vesting schedule can be
applied to employer contributions
-
Participant loans are available
-
Withdrawals are governed
by the plan document and may be restricted
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Who Can Establish:
- Businesses
- Partnerships
- S-Corporations
- C-Corporations
- Non-Profit Groups
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Annual Contributions:
-
Employees can defer up
to $13,000 ($16,000 if age 50 or older).
-
Deferrals and employer
contributions cannot exceed the lesser of
100% of employee's compensation or $41,000
per employee. Catch-up deferrals are not included
in this limit.
-
Total deductible employee
contributions to the plan cannot exceed 25%
of total eligible compensation. Employer contributions
do not include deferrals.
-
Maximum eligible compensation:
$205,000.
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401 (k) Candidates:
-
Employers who wish to have
the responsibility of funding retirement belong
to their employees.
-
Employers who are too large
to open or maintain a SIMPLE IRA plan.
-
Profitable and growing
companies who wish to start a retirement plan
and can afford to maintain one.
-
Employers with a large
number of highly compensated employees.
-
Employers who have not
been able to make consistent annual contributions
to their profit sharing plan.
-
Employers who believe their
defined benefit plan is getting to expensive
to maintain.
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Contact a UVEST Investment
Consultant to go over your options for retirement.
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