SEP IRA SIMPLE IRA Individual and Roth Individual 401(k) Plans Profit Sharing Plan Money Purchase Plan

 

The Simplified Employee Pension Plan (SEP) provides employers with a simplified method of making contributions toward their own and their employees retirement.

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Savings Incentive Match Plan for Employees (SIMPLE) IRA provides a flexible and affordable retirement plan for small businesses with 100 or fewer employees.

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Individual 401(k) and Roth Individual 401(k) plans are designed for self-employed individuals who have no employees other than a spouse. The plans are designed for individuals who want to maximize their retirement savings and have generous contribution limits.

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Profit Sharing Plans allow employers to give their employees a share in the profits of the company. Employees receive a percentage of profits based on the company's earnings.

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Money Purchase Plans are defined contribution plans that require fixed employer contributions each year.

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Account Establishment Deadlines

 

Must be established by the employer's tax filing deadline (plus extensions) for the tax year to which the qualifying contribution(s) will apply.

 

 

Must be established by October 1 of the tax year to which the qualifying contribution(s) will apply.

 

 

Must be established by December 31 of the tax year to which the qualifying contribution(s) will apply.

 

 

Must be established by December 31 of the tax year to which the qualifying contribution(s) will apply.

 

 

Must be established by December 31 of the tax year to which the  qualifying contribution(s) will apply.

 

Eligibility Requirements

 

Self-employed or small business owner
 

Any employee 21 or older working for you at least three of the past five years, and earns at least $550 in 2014 ($600 in 2015).

 

Business with 100 or fewer employees that do not maintain another qualified retirement plan
 

Any employee expected to earn at least $5,000 this year, and who earned at least $5,000 in the two immediately preceding years

 

 

Self-employed individual and small businesses with no eligible employees other than the owner and spouse.
 

Part time employees can be excluded if work less than 1000 hours per year.

 

 

Any employee age 21 or older working for you at least two years must be included in the plan if vesting is 100% immediate (or one year if vesting is not 100% immediate)

 

Any employee age 21 or older working for you at least two years must be included in the plan if vesting is 100% immediate (or one year if vesting is not 100% immediate)

Advantages for Employer

 

Deduct contributions as a business expense
 

Contributions are strictly discretionary
 

Low administrative costs and easy plan management
 

Recruit and retain quality employees

 

 

Deduct contributions as business' expense
 

Allows employees to share in the cost of funding their accounts
 

Recruit and retain quality employees

 

 

Deduct contributions as a business expense.
 

Contributions are strictly discretionary and are not tied to profits.
 

Allows borrowing against retirement assets.

 

 

Opportunity to share profits with employees
 

Contributions are strictly discretionary and are not tied to profits
 

Allows you to choose a vesting schedule
 

Recruit and retain quality employees

 

 

Deduct contributions as a business expense
 

Allows you to choose a vesting schedule
 

Recruit and retain quality employees

 

Advantages for Employees

 

Tax deferred retirement savings
 

Employer funded
 

Employees can also invest in Traditional and Roth IRAs

 

Tax deferred retirement savings
 

Employee salary deferrals reduce taxable income for the contribution year
 

Employees can also invest in Traditional and Roth IRAs

 

Tax deferred retirement savings.
 

The Individual 401(k) account reduces taxable income.
 

Owner/spouse can also invest in Traditional and Roth IRAs.
 

The Roth Individual 401(k) is available to those high income individuals that do not qualify to contribute directly to a Roth IRA.

 

 

Share of profit based on earnings.
 

Employees can also invest in Traditional and Roth IRAs

 

Tax deferred retirement savings
 

Know how much is being contributed to their account

Contributions

 

Contribution limits:
Employer contributions up to $52,000 in 2014 ($53,000 in 2015) or 25% of compensation, whichever is less.

 

Contribution deadline: 
The employer's tax filing deadline (plus extensions)

 

Who contributes: 
Employer

 

Contribution limits:
Employees salary deferrals up to $12,000 in 2014 ($12,500 in 2015) or up to $14,500 in 2014 ($15,500 in 2015) if age 50 or older. Employers must match 100% up to 3% of employee's salary, or 2% for all eligible employees (maximum non-elective $5,200 in 2014 ($5,300 in 2015)).

 

Contribution deadline: 
Employer: The employer's tax filing deadline (plus extensions)

 

Employee salary deferral: 1/30/2015 for 2014 (1/30 16 for 2015)

 

Who contributes: 
Employer and employee

 

Contribution limits:
Up to $17,500 salary deferrals in 2014 ($18,000 in 2015) or up to $23,000 in 2014 ($24,000 in 2015) if age 50 or over. These salary deferrals can be split between the pre-tax Individual 401(k) account and the after-tax Roth Individual 401(k) account. A profit sharing contribution can be made up to $52,000 in 2014 ($53,000 in 2015) or 25% of compensation, whichever is less. The contribution limit increases to $57,500 in 2014 ($59,000 in 2015) if age 50 or older. This discretionary contribution must be made to the pre-tax Individual 401(k) account. Total annual contributions cannot exceed the lesser of $52,000 in 2014 ($53,000 in 2015) or $100% of compensation. The yearly dollar limit increases to $57,500 in 2014 ($59,000 in 2015) if age 50 or older.

 

Contribution deadline: 
The employer's tax filing deadline (plus extensions)

 

Who contributes: 
Self-employed individual/business owner and spouse

 

 

Contribution limits: 
Employer contributions up to $52,000 in 2014 ($53,000 in 2015) or 25% of compensation, (whichever is less).

 

Contribution deadline: 
The employer's tax filing deadline (plus extensions)

 

Who contributes: 
Employer

 

Contribution limits: : 
Employer contributions up to $52,000 in 2014 ($53,000 in 2015) or 25% of compensation, (whichever is less).

 

Contribution deadline: 
The employer's tax filing deadline (plus  extensions)

 

Who contributes: 
Employer

The tax information provided is for informational purposes only and is not intended, and should not be construed, as tax advice or a recommendation. You should consult with a professional tax advisor about your individual circumstances.