Retirement Plan Summary
EMPLOYER SPONSORED PLANS
SEP (SIMPLIFIED EMPLOYEE PENSION)
SEP Plans provide a simplified method for employers to make contributions to a retirement plan for their employees. Instead of establishing a profit-sharing or money purchase plan with a trust, employers can adopt a SEP agreement and make contributions directly to an individual retirement account established for each eligible employee.
- Easy to set up and operate
- Administrative costs are low
- Plan can have flexible annual contributions
SIMPLE IRA PLAN (SIMPLE)
Tax-favored retirement plans that certain small employers (including self-employed individuals) can set up for the benefit of their employees, a SIMPLE IRA plan is a written salary reduction agreement between employee and employer that allows the employee, if eligible, to choose to have the employer contribute the salary reductions to a SIMPLE IRA on the employee’s behalf.
- Easy and inexpensive to set up and operate
- No discrimination testing required
- Lower contribution limits than some other retirement plans
401(K) PLAN
A type of defined contribution plan that allows employee salary deferrals and/or employer contributions.
- Can have other retirement plans in addition to 401(k)
- Plan available to a business of any size
- Greater flexibility in contributions
PROFIT SHARING PLAN
A type of defined contribution plan which allows discretionary annual employer contributions.
- Can have other retirement plans in addition to a profit sharing plan
- Greater flexibility in contributions - contributions are strictly discretionary
- Can be used by a business of any size
DEFINED BENEFIT PLAN
A type of plan that is funded primarily by the employer and whose contribution is actuarially determined.
- Significant benefits possible in a relatively short period of time
- Employers can contribute (and deduct) more than under other retirement plans
- Plan can be used to promote certain business strategies by offering subsidized early retirement benefits