Retirement Plans

Simplified Employee Pension IRA

Simple IRA

Individual 401(k)

401(k) Plan

Profit Sharing Plan

General Description

A low cost flexible plan that allows small business owners or self-employed to make tax deductible contributions to a retirement plan account.

A low cost salary deferral plan for employees of a small business with fewer than 100 employees not offering another retirement plan.

Designed for a small business owner with no employees that wants flexibility on contributions each year. Roth 401(k) account feature allowed.

Flexible plan with the highest amount possible for employee contributions. Loans, hardship withdrawals and Roth accounts permitted.

Flexible Plan that allows employer’s contribution to be determined annually.

Coverage Requirements

Must be offered to all employees who are at least age 21, employed by the employer for 3 of the last 5 years and had compensation of $550 in 2013.

Must be offered to all employees who have earned at least $5,000 in any prior 2 years, and are reasonably expected to earn at least $5,000 in current year.

Sole proprietors or partners with no common-law employees. Spouses of owners and partners are considered owners.

Generally, employees age 21 and older who have worked at least 1000 hours in previous year.

Generally, employees age 21 and older who have worked at least 1000 hours in previous year.

Annual Contributions

For tax year 2013- the lesser of 25% of compensation or $51,000. Employer decides annually whether to make a contribution.

Employee: May salary defer up to $12,000 or $14,500 if age 50 or older.

Employer: Match employee contributions up to 3% of compensation or 2% of compensation for all eligible employees.

Combination of salary deferral and profit sharing may not exceed $51,000 or $56,500 if age 50 or older for the plan year.

Employee: For 2013, 100% of compensation or $17,500 if under age 50. Over age 50 an additional $5,500. Combination of employee and employer for 2012 is $51,000 for under age 50 and over age 50, $56,500.

Employer may contribute up to 25% of compensation or $51,000. If combined with a 401(k) feature the maximum contribution for 2013 is $51,000 for under age 50 and over age 50, $56,500.

Investment Options

Mutual funds, stocks, bonds, deposit accounts

Mutual funds, stocks, bonds, deposit accounts

Mutual funds, stocks, bonds, deposit accounts

Mutual funds, stocks, bonds, deposit accounts

Mutual funds, stocks, bonds, deposit accounts

Vesting

100% immediate vesting.

100% immediate vesting.

100% immediate vesting.

Immediate vesting for salary deferrals and employer safe harbor contributions. Vesting schedule can apply to certain types of employer contributions.

Vesting schedule can apply unless eligibility more than one year, then immediate vesting after 2 years.

Taxes and Penalties

Taxed as ordinary income when withdrawn. Could be subject to 10% IRS penalty if withdrawn before age 59 1/2 if no exception applies.

Taxed as ordinary income when withdrawn. Early withdrawal penalty of 25% during first two years 10% thereafter if before age 59 1/2 if no exception applies.

Tax - deductible contributions are taxed as ordinary income when withdrawn and subject to 10% penalty if withdrawn before age 59 1/2 unless an exception applies.

Tax - deductible contributions are taxed as ordinary income and subject to 10% penalty if withdrawn before age 59 1/2 if no exception applies.

Tax - deductible contributions are taxed as ordinary income and subject to 10% penalty if withdrawn before age 59 1/2 if no exception applies.

Required Withdrawals

Age 70 1/2

Age 70 1/2

Generally, age 70 1/2 unless still employed.

Generally, age 70 1/2 unless still employed.

Generally, age 70 1/2 unless still employed.