1
401(K) PLAN WITH A SAFE HARBOR FEATURE
This plan can be a great vehicle. With this plan, you can make significant contributions because employees are guaranteed a meaningful base contribution. The “safe harbor” is a free pass on the testing that is otherwise required to demonstrate adequate coverage and fairness.
2
AGE-WEIGHTED PLAN DESIGN
For some business owners, this design can be advantageous because, as its name implies, it takes the age of employees into consideration when calculating annual contributions. This can be especially helpful if owners are older and your workforce is relatively younger as the contribution calculations favor those closer to retirement.
3
DEFINED BENEFIT PLAN
A traditional Defined Benefit plan can also work to your advantage as it’s meant to guarantee a promised benefit at retirement and is calculated to contribute to fund that liability. Defined Benefit plans permit much higher annual contributions than 401(k)-type plans, but it’s important to note that annual contributions to fund their results are mandatory, not discretionary.
4
CASH BALANCE PLAN
A Cash Balance plan is something of a hybrid. It’s has the mandatory provisions of a Defined Benefit plan, but provides an accumulated balance like a Defined Contribution plan – rather than a promised benefit at retirement. It, too, allows you to save much more than is possible under a 401(k) or Profit Sharing plan.
5
PAIRING 401(K) AND CASH BALANCE
This option provides the opportunity for employees to participate while giving you a generous savings path.
6
CATCH-UP CONTRIBUTIONS
The IRS provides all employees over the age of 50 the opportunity to make what are called “catch-up” contributions. This means that you can catch up for years when you were building your business or raising a family and weren’t able to put away enough for retirement. Catch-up contributions raise the deferral annual limit for older savers.
