Retirement Plans For Your Business

401(k) Plans

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Annual Maximum Contribution:

The annual maximum contribution to a 401(k) plan is 15% of participating payroll. This includes both the employers contribution as well as the employee's deferrals.

The plan accepts both deductible contributions from the employer and pre-tax contributions from employees. Deferral from highly compensated employees may be subject to a non-discrimination test.

After tax contributions are also possible.

The employer can choose to make:

• No contribution.
• Matching contributions.
• Fixed contributions.
• Discretionary (profit sharing) contributions.

Vesting:

The employer can set minimum age and service requirements for participating in the 401(k) plan.

A vesting schedule is permitted for employer contributions, if the service requirement is one year or less. Employee deferrals are always 100% fully vested.

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