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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investment grows tax deferred until withdrawn, when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:
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Permits pre-tax salary
deferral contributions
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Due to complicated discrimination
testing and tax reporting, third party administrative
services are required
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Employer contributions
are tax deductible
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Employer matching and Profit
Sharing contributions are optional
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Vesting schedule can be
applied to employer contributions
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Participant loans are available
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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: (based on 2009 limits)
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Employees can defer up
to $16,500 ($22,000 if age 50 or older).
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Deferrals and employer
contributions cannot exceed the lesser of
100% of employee’s compensation or $49,000
per employee. Catch-up deferrals are not included
in this limit.
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Total deductible employee
contributions to the plan cannot exceed 25%
of total eligible compensation. Employer contributions
do not include deferrals.
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Maximum eligible compensation:
$245,000.
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401 (k) Candidates:
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Employers who wish to have
the responsibility of funding retirement belong
to their employees.
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Employers who are too large
to open or maintain a SIMPLE IRA plan.
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Profitable and growing
companies who wish to start a retirement plan
and can afford to maintain one.
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Employers with a large
number of highly compensated employees.
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Employers who have not
been able to make consistent annual contributions
to their profit sharing plan.
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Employers who believe their
defined benefit plan is getting to expensive
to maintain.
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Contact a LPL Investment
Consultant to go over your options for retirement.
Financial Advisors of LPL Financial are Registered Representatives with, and Securities, Advisory Services and Insurance Products are offered through LPL Financial and its affiliates, Member FINRA/SIPC. LPL Financial is not a registered broker/dealer. Investments are: Not FDIC insured, may lose value, are not bank guaranteed, and are not obligations of LPL Financial. LPL Branch Office located at 1311 Carolina Ave, Washington, North Carolina 27889. Investment Advisory Services offered through LPL Financial, a SEC Registered Investment Advisor
FINRA (www.FINRA.org ) SIPC (www.sipc.org)
This site is designed for U.S. residents only. The services offered within this site are offered exclusively through our U.S. registered representatives. LPL Financial U.S. registered representatives may only conduct business with residents of the states for which they are properly registered. Please note that not all of the investments and services mentioned are available in every state.
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