Qualified Retirement Plans

Profit Sharing
One of the simplest and most flexible of all qualified retirement plans, profit-sharing plans typically allow the employer to make discretionary annual contributions not to exceed the lesser of 25 percent of eligible compensation or $40,000 for all participating employees. Contribution amounts may be varied each year.

401(k)
This popular plan allows employees to defer income into a qualified retirement plan for federal income tax purposes, 401(k) plans can also be designed to allow an employer to make matching contributions, or discretionary profit-sharing contributions on behalf of all employees.

412(i)
These powerful pension plans are designed to deliver maximum benefit to 1 or a few owners that have a small number of employees (or no employees). This plan which is approved by the IRS allows for significantly greater pre-tax contributions than a traditional profit sharing plan or defined contribution plan. Pre-tax contributions can reach $200,000+ per year, depending on age and compensation.

Money Purchase
A traditional qualified retirement plan, the money purchase plan offers less flexibility than certain other plans, but higher contribution limits. Generally, the employer may select any percentage contribution up to 25 percent of eligible compensation, but once selected may not change the selection without amending its plan. Contributions must be made on behalf of all eligible employees on a nondiscriminatory basis. With the newest tax law changes, many money purchase pension plans have been converted to Profit Sharing plans due to superior flexibility.

403(b)
Designed only for certain non-profit and educational organizations, this plan allows employees to defer pre-tax income (for federal income tax purposes) into a retirement plan while giving the employer the ability to make certain additional contributions.

Group Annuities
Group annuity products can expand your company's portfolio of benefits, and offer your employees excellent retirement savings options. Many group annuity products offer the significant advantage that they are guaranteed to pay benefits for the lifetime of the annuitant.

SEP-IRA
This company sponsored IRA plan offers powerful benefits coupled with simplified administration and low fees. Contributions cannot exceed the lesser of 25% of an employees compensation or $40,000 per year. The maximum amount of compensation that can be considered for computing SEP-IRA contributions is $200,000. It should be noted that a small business owner must contribute the same percentage of compensation to the employees as he/she contributes for him/herself. SEP-IRA’s are flexible for employers. A contribution does not have to be made every year. These contributions are tax-deductible.

Simple-IRA
Similar to the SEP-IRA, the Simple-IRA is a company sponsored plan which provides tax deferral opportunities and employer matching at a low administrative cost to the employer. Each participant may defer up to $7,000 (or $7,500 if over 50). These limits are scheduled to increase over the next few years. IMPORTANT: As a small business owner, you must match each employee's deferral up to 3 percent of their compensation. (It's generally 3% but there is a provision to use a lower amount periodically. You can also use a 2% rate, but then you have to contribute 2% of all employees, even if they don't participate. With the 3% match, you only have to match those that participate. With a Schedule C, or a k-1 partner, you match based on the earned income for the owner. This is true whether you have employees or not. If you are self-employed, you can also defer up to $7,000 ($7,500 per year if over 50) in the SIMPLE IRA. You must then also match the deferral, up to 3% of your net business earned income.

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