space
Fox & Fox

Comparison of Retirement Plans

Click here to go back to Resources

Feature Basic Plan Type Who generally adopts Can employer sponsor other qualified retirement plans Who can contribute Cost index Maximum employee deferral contribution
401(k) Defined Contribution Corporations, partnerships, limited liability companies Yes   Low to High depending upon design complexity, service model adopted and other factors The lesser of $16,500 for 2011 (Indexed for inflation each year) or 100% of compensation
Solo 401(k) Defined Contribution Sole proprietorships, partnerships, limited ability companies and corporations with no common law employees Yes   Low to Medium The lesser of $16,500 for 2011 (Indexed for inflation each year) or 100% of compensation
Safe Harbor 401(k) Defined Contribution Sole proprietorships, partnerships, limited liability companies and corporations Yes   Low to Medium The lesser of $16,500 for 2011 (Indexed for inflation each year) or 100% of compensation
Simple 401(k) Defined Contribution Sole proprietorships, partnerships, limited liability companies and corporations with 100 or fewer eligible employees No   Low to Medium The lesser of $11,500 for 2011 (Indexed for inflation each year) or 100% of compensation
Profit Sharing Defined Contribution Sole proprietorships, partnerships, limited liability companies and corporations Yes   Low to High depending upon design complexity, service model adopted and other factors None
SEP IRA IRA Based Sole proprietorships, partnerships, and small businesses Yes   Low None. Contributions are generally by employer only
SIMPLE IRA IRA Based Sole proprietorships, partnerships, limited liability companies and corporations with 100 or fewer employees No Employee and employer Low The lesser of $11,500 for 2011 (Indexed for inflation each year) or 100% of compensation
403(b) ERISA Title I Plans with employer contributions   Non-profit organizations exempt under IRS Section 501(c)(3) (e.g., churches, hospitals and schools)       100% of compensation or $16,500, whichever is less. Special catch-up provisions may increase the contribution limit.
457 (b) Eligible Plans with Only Salary Deferral Contributions   Governmental employers, public utility companies, elementary and secondary schools, public universities and colleges, city, county and state hospitals, certain non-governmental tax-exempt employers.       100% of compensation or $16,500, whichever is less. Special catch-up provisions may increase the contribution limit. Employer contributions offset employee deferrals.
457(f) Ineligible Plans with employer contribution   Governmental employers, publindary schools, public universities and colleges, city, county and state hospitals, certain non-governmental tax-exec utility companies, elementary and secompt employers.       No limit.

Click here to go back to Resources

Feature Employer Contributions Catch-up contributions for those age 50 and older Employee eligibility Who directs investments IRS reporting by employer
401(k) Discretionary; maximum tax-deductible employer contribution is 25% of eligible payroll; overall maximum contribution per eligible employee is 100% of compensation not to exceed $49,000 $5,500 for 2011 (Indexed for inflation each year) Age requirement cannot exceed 21; service requirement can’t exceed one year; may exclude union employees Employer/Trustee or plan may allow individual direction Form 5500
Solo 401(k) Discretionary; maximum tax-deductible employer contribution is 25% of eligible payroll; overall maximum contribution per eligible employee is 100% of compensation not to exceed $49,000 $5,500 for 2011 (Indexed for inflation each year) Age requirement cannot exceed 21; service requirement can’t exceed one year; Individual Form 5500-EZ when plan assets reach $100,000
Safe Harbor 401(k) Required match of 100% on the first 3% of employee deferral plus 50% on the next 2% of employee deferral or 3% of compensation to all eligible employees $5,500 for 2011 (Indexed for inflation each year) Age requirement cannot exceed 21; service requirement can’t exceed one year; may exclude union employees Employer/Trustee or plan may allow individual direction Form 5500
Simple 401(k) Required match of 100% up to 3% of employee’s compensation or 2% of compensation to all eligible employees $2,500 for 2011 (Indexed for inflation each year) Age requirement cannot exceed 21; service requirement can’t exceed one year; may exclude union employees Individual Form 5500
Profit Sharing Discretionary; maximum tax-deductible employer contribution is 25% of eligible payroll; overall maximum contribution per eligible employee is 100% of compensation not to exceed $49,000 N/A Age requirement cannot exceed 21; service requirement can’t exceed one year; two years if 100% vested; may exclude union employees Employer/Trustee or plan may allow individual direction Form 5500
SEP IRA Discretionary; cannot exceed the lesser of 25% of the employee’s compensation or $49,000 N/A Age requirement cannot exceed 21; have earned compensation in three of the past five years; received compensation of at least $500; may exclude union employees Individual None
SIMLE IRA Required match of 100% up to 3% of employee’s compensation (may be reduced to 1% in 2 of any 5 years) or 2% of compensation to all eligible employees $2,500 for 2011 (Indexed for inflation each year) All employees earning $5,000 for any past two years and is expected to do so in current year; no age limit permitted; may exclude union employees Individual None
403(b) ERISA Title I Plans with employer contributions The employer’s contributions (including elective deferrals) to an employee’s account should not be more than the lesser of $49,000 or 100% of the employee’s compensation for the year. $5,500 Minimum participation, minimum coverage and nondiscrimination requirements may apply Employer/Trustee or plan may allow individual direction  
457 (b) Eligible Plans with Only Salary Deferral Contributions Employer and employee contributions combined cannot exceed 100% of the employee’s compensation or $16,500, whichever is less. Employer contributions offset employee deferrals.

Tax-Exempt-N/A

Governmental-$5,000. A special catch-up provision for participants within three years of normal retirement age may apply.
Tax-Exempt-Eligibility for a select group of management or highly compensated employees, except if the group is church-related. Governmental-none. Individual  
457(f) Ineligible Plans with employer contribution No limit.

N/A

Eligibility for a select group of management or highly compensated employees Employer/trustee; however, plan may allow participant direction  

Click here to go back to Resources

Feature Establishment deadline Funding deadline
401(k) By the last day of the plan year for which the plan is effective Employee contributions must be deposited as soon as administratively possible, but no later than 15 business days after the month in which the deferrals were made; employer contributions must be deposited by the time the corporate tax return (with extensions) is filed for the tax year in which the deduction is being taken
Solo 401(k) By the last day of the plan year for which the plan is effective Unincorporated businesses-employer/employee contributions: by the time the corporate tax return (with extensions) is filed for the tax year in which the deduction is being taken; incorporated businesses-employer contributions: by tax-filing date plus extensions and employee contributions must be deposited as soon as administratively possible, but no later than 15 business days after the month in which the deferrals were made
Safe Harbor 401(k) Any date between January 1st and October 1st; may not have an effective date that is before the date plan actually adopted Employee contributions must be deposited as soon as administratively possible, but no later than 15 business days after the month in which the deferrals were made; employer contributions must be deposited by the time the corporate tax return (with extensions) is filed for the tax year in which the deduction is being taken
Simple 401(k) Any date between January 1st and October 1st; as soon as administratively possible for businesses established after October 1st Employee contributions must be deposited as soon as administratively possible, but no later than 15 business days after the month in which the deferrals were made; employer contributions must be deposited by the time the corporate tax return (with extensions) is filed for the tax year in which the deduction is being taken
Profit Sharing By the last day of the plan year for which the plan is effective Contributions must be deposited by the time the corporate tax return (with extensions) is filed for the tax year in which the deduction is being taken
SEP IRA Established by the time the corporate tax return (with extensions) is filed for the tax year in which the deduction is being taken Funded by the time the corporate tax return (with extensions) is filed for the tax year in which the deduction is being taken
SIMLE IRA Any date between January 1st and October 1st; as soon as administratively possible for businesses established after October 1st Employee contributions must be deposited within 30 days after the end of the month in which the amounts would otherwise have been payable to the employee in cash; employer contributions must be deposited by the time the corporate tax return (with extensions) is filed for the tax year in which the deduction is being taken
403(b) ERISA Title I Plans with employer contributions The plan may be established any time during the calendar year.

Employer-The plan may be funded any time during the calendar year. Employee-As soon as reasonable, but no later than 15th business day of the month following the month in which the deferrals are withheld.

457 (b) Eligible Plans with Only Salary Deferral Contributions The plan may be established any time during the calendar year.

Salary deferral ongoing from payroll.

457(f) Ineligible Plans with employer contribution The plan may be established any time during the calendar year.

Anytime

Click here to go back to Resources

Can rollover to: IRA SIMLE IRA Roth IRA SEP IRA Simple 401(k) #1 Safe Harbor 401(k) #1 403(b) #1 Govern-mental 457 #1 401(k) #1 Roth 401(k) #5 Minimum vesting Loans Roth Contri-butions Allowed
401(k) Yes No No Yes Yes #3 Yes Yes Yes Yes No Immediate on Employee Contributi-ons; Employer contribute-ons can be subjected to vesting schedule Emp-loyer option Yes #6
Solo 401(k) Yes No No Yes Yes #3 Yes Yes Yes Yes  No Immediate Emp-loyer option Yes #6
Safe Harbor 401(k) Yes No No Yes Yes #3 Yes Yes Yes Yes No Immediate Emp-loyer option Yes #6
Simple 401(k) Yes No No Yes Yes #3 Yes Yes Yes Yes No Immediate Emp-loyer option Yes #6
Profit Sharing Yes No No Yes Yes #3 Yes Yes Yes Yes No Employer contributi-ons can be subjected to vesting schedule Emp-loyer option No
SEP IRA Yes No Yes Yes Yes #3 Yes Yes Yes Yes No Immediate No No
SIMPLE IRA Yes #2 Yes #2 Yes #2 Yes #2 #3 Yes #2   Yes #2 Yes #2 Yes #2 No Immediate No No
403(b) ERISA Title I Plans with employer contributions Yes     Yes     Yes Yes          
457 (b) Eligible Plans with Only Salary Deferral Contributions Yes     Yes     Yes Yes          
457(f) Ineligible Plans with employer contribution No rollovers                        

Click here to go back to Resources

Feature When can withdrawals be taken?
401(k) Withdrawals can generally be made for the following reasons:
  • Termination of employment
  • Disability
  • Death
  • Retirement
  • Hardship
If taken prior to an employee reaching age 59(1/2) may be subject to a 10% penalty; #4 withdrawals are generally considered taxable income
Solo 401(k) Withdrawals can generally be made for the following reasons:
  • Termination of employment
  • Disability
  • Death
  • Retirement
  • Hardship
If taken prior to an employee reaching age 59(1/2) may be subject to a 10% penalty; #4 withdrawals are generally considered taxable income
Safe Harbor 401(k) Withdrawals can generally be made for the following reasons:
  • Termination of employment
  • Disability
  • Death
  • Retirement
  • Hardship
If taken prior to an employee reaching age 59(1/2) may be subject to a 10% penalty; #4 withdrawals are generally considered taxable income
Simple 401(k) Withdrawals can generally be made for the following reasons:
  • Termination of employment
  • Disability
  • Death
  • Retirement
  • Hardship
If taken prior to an employee reaching age 59(1/2) may be subject to a 10% penalty; #4 withdrawals are generally considered taxable income
Profit Sharing Withdrawals can generally be made for the following reasons:
  • Termination of employment
  • Disability
  • Death
  • Retirement
  • Hardship
If taken prior to an employee reaching age 59(1/2) may be subject to a 10% penalty; #4 withdrawals are generally considered taxable income
SEP IRA Withdrawals can be taken any time; withdrawals taken prior to an employee reaching age 59(1/2) may be subject to IRS penalties; withdrawals are generally considered taxable income
SIMPLE IRA Withdrawals can be taken any time; withdrawals taken prior to an employee reaching age 59(1/2) and within the first 2 years of participation, may be subjected to a 25% early withdrawal penalty; after 2 years, a 10% early withdrawal penalty would apply; withdrawals are generally considered taxable income
403(b) ERISA Title I Plans with employer contributions 10% tax penalty unless over 55 and separated form service (except if self-employed or more than 10% owner) or death or disability. Distributions are only allowed upon the occurrence of triggering event. Withdrawals are generally considered taxable income.
457 (b) Eligible Plans with Only Salary Deferral Contributions Severance from employment, unforeseeable emergencies, small inactive accounts. Also, plan termination and QDROs (if stated in the plan language). No tax penalty applies to any distribution. Withdrawals are generally considered taxable income.
457(f) Ineligible Plans with employer contribution Distributions must be made on any monies that become vested. No tax penalty applies to any distribution. Withdrawals are generally considered taxable income.

  1. Even though a plan may accept rollovers, they are not required to do so. Hardship distributions cannot be rolled over.
  2. Only after the individual has participated in the SIMPLE IRA for two years.
  3. Some retirement professionals do not believe that the IRS Code permits such a rollover.
  4. There is an exception to this rule which allows an employee who retires during the calendar year in which they turn 55, or later, to withdraw without penalty.
  5. Roth 401(k) funds can only be rolled over to a designated Roth 401(k) account within 401(k) plan or to a Roth IRA.
  6. This is a design option that the plan may or may not permit.

Click here to go back to Resources

space
space
space