Safe Harbor 401(k) Plans

Recent regulations have been established for 401(k) plans to simplify nondiscrimination testing while improving the ability to achieve greater contribution levels for your Highly Compensated Employees (HCE). The general rules of using a Safe Harbor plan are as follows …read more 


“Cross Testing” Defined Contribution Plan

‘Cross testing’ rules permit a defined contribution plan to be considered nondiscriminatory on the basis of the benefits that will be provided, rather than how employer contributions are allocated. These types of plan allocations are skewed to favor a certain group of employees. The allocation method for these plans will vary from year to year dependent upon the level of contribution and the census data …read more 


Defined Benefit Plans

The retirement benefit is fixed, generally as a percentage of pay in Defined Benefit plans. The contribution will be whatever funding is required to provide the benefit for each employee at retirement and is actuarially determined. The maximum benefit allowed is 100% of compensation with maximum limits as set by the IRS. This maximum amount is indexed each year for cost of living adjustments …read more 


401(k) Savings Plan

These plans fall under the Profit Sharing Plan rules and allow employees to contribute a portion of their salary into a 401(k) retirement plan.  The plan may allow contributions on either a pre-tax basis or an after-tax basis depending on the options of the plan.  The employee elects to have a portion of their income deferred into the plan and receive the benefit of the tax deferral of all earnings in the plan until a.…read more 


Money Purchase Pension Plans

In a Money Purchase Plan, the annual employer contribution is defined by a formula written in the plan document and is not discretionary.  The annual contribution limit for any participant can be set at any contribution percentage not to exceed 25% of his/her total compensation with annual limitations per participant…read more 


Employee Stock Ownership Plan (ESOP)

An Employee Stock Ownership Plan (ESOP) is a qualified plan that invests primarily in “qualifying employer securities”.  ESOP’s allow employees to become stockholders in the company through employer contributions of the company’s stock.  Employers choose this plan when they want to give an incentive to employees by rewarding them with ownership in the company.  The regulations that monitor these plans are complex and incorporate…read more 


Profit Sharing Plan

Profit Sharing plans allow for the sharing of employer profits with employees using the discretionary option. Since neither the contribution nor the benefit is fixed, some employers find this desirable if they are not certain how much they can contribute to a plan from year to year…read more 

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