Individual/SOLO 401(k)
Individual 401(k) plans allow self-employed individuals or small business owners with no employees other than a spouse to potentially set aside higher contribution amounts than with other small business plans, with less administrative burden than a 401(k).
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Unlike other retirement plans, an individual 401(k) is strictly for sole proprietors, who have no employees other than a spouse. Potential clients might include attorneys, doctors, architects, engineers, dentists and consultants
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The high contribution limits—combined employer and employee contributions of up to $53,000 for 2015 and 2016, not including potential catch-up contributions—make this an attractive option. Tax-free loans are also permitted
Let MVM show you how a SOLO 401(k) plan, even with modest contributions, can reduce current taxes and build toward greater retirement security.
SEP IRA
Simplified Employee Pension (SEP) IRAs allow self-employed and small business owners and their employees to save and invest for retirement with minimal administrative burden.
SEP IRAs let clients decide how much they contribute from year to year, so they can provide an attractive benefit without locking the business into an obligation it might have trouble meeting in some years.
SIMPLE IRA
Savings Incentive Match Plan for Employees (SIMPLE) IRAs allow small businesses to offer a substantial retirement benefit that enables eligible employees to contribute pre-tax compensation to the plan.
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A SIMPLE IRA may be appropriate for small business owners who want to attract and retain employees by providing a pre-tax salary deferral option and employer contributions
401(k) Plan
A 401(k) retirement plans accept employee contributions, and oftentimes matches them. 401(k) plans come in many shapes and sizes. Traditional, tax-deferred 401(k) contributions are made before income taxes are applied, and earnings and contributions are not taxable until they are withdrawn. Roth 401(k) contributions are made with after-tax dollars, but withdrawals, including earnings, are tax-free if certain conditions are met.
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These programs offer plan sponsors significant flexibility in how they contribute, while providing their employees with a high-limit opportunity to invest for retirement
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If economic growth strengthens, many companies may experience higher turnover. Companies will need to offer attractive benefits to remain competitive
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A 401(k) plan might be appropriate for business owners who want to attract and retain talented employees and want a customized plan
SAFE HARBOR 401(k) Plan
A popular version of traditional 401(k) plans, Safe Harbor Plans reduce IRS non-discrimination testing limitations while allowing business owners to maximize contributions to their own 401(k) plans.
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No discrimination testing when safe harbor rules are met
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Participant deferral of current income taxes or pre-payment of income taxes when using Roth option
PROFIT SHARING Plan
Profit sharing plans allow business owners to fund a retirement program for eligible employees with a high degree of flexibility—deciding each year whether and how much to contribute.
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If you already offer a retirement plan for your business, you may want to add a profit sharing plan to attract and retain employees and gain significant tax deductions
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These plans can motivate employees to achieve broad company profitability goals, since they may enjoy greater employer contributions to their retirement accounts when the company does well
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A profit sharing plan might be appropriate for business owners who want to provide an attractive employee benefit with contribution flexibility
MONEY PURCHASE PENSION Plan
Money purchase pension plans allow business owners to provide employees with a fixed, pre-established benefit for employees, expressed as a percentage of compensation.
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Does your company have a significant union presence. A money purchase plan may offer them a solution for providing employees with a reliable retirement plan contribution over time, which is something union leaders and workers want
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Such plans can be added on top of existing retirement plans to keep experienced workers engaged and earn their loyalty
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A money purchase pension plan may help businesses with a union presence strengthen their relationships with union employees
CASH BALANCE Plan
A cash balance plans (CBP) are a type of defined benefit plan that allow business owners that have employees the ability to design a retirement plan that provides the majority of benefits to the business owner. This plan type works best if the business owners are the oldest employees in the company. A CBP provides more flexibility than a traditional defined benefit plan (DBP).
A CBP is a hybrid plan. While being a DBP, it looks like a profit sharing plan to employees. In a CBP, a hypothetical account balance is created for each participant. Contribution allocations and interest credits are provided to each hypothetical account (regardless of the plan’s actual investment experience). As in a DBP, the employer assumes the risk of investment gain or loss. There are also minimum annual funding requirements. This is a great plan for successful companies that want to reduce taxes and provide an excellent retirement plan benefit to the owners and employees.
NEW COMPARABILITY Plan
A new comparability plans are qualified profit-sharing plans that can have more substantial contributions for favored employees (usually higher-paid workers and key employees). With this type of plan, contributions are not allocated strictly as a percentage of compensation. Instead, by dividing up plan participants into two or more classes and having different contribution rates for each class, this type of plan allows businesses to maximize plan contributions for certain employees and minimize allocations to other employees. A new comparability plan satisfies nondiscrimination requirements by requiring minimum contributions and then having the plan pass a series of tests to show that the projected benefits for each class meet the coverage requirements.
403(b) Plan
Designed for employees of nonprofit and educational organizations, traditional, tax-deferred 403(b) contributions are made before income taxes are applied, and earnings and contributions are not taxable until they are withdrawn. Roth 403(b) contributions are made with after-tax dollars, but withdrawals, including earnings, are tax-free if certain conditions are met.
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More flexibility with contribution amounts due to the increase in deferral limits
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Participant deferral of current income taxes or pre-payment of income taxes for Roth option
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An automatic contribution arrangement feature is available
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Contributions can only be invested in mutual funds or annuities
Individual Retirement Accounts Overview
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