Comparison of Retirement Plans
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| Feature | Basic Plan Type | Who generally adopts | Can employer sponsor other qualified retirement plans | Who can contribute | Cost index | Maximum employee deferral contribution |
| 401(k) | Defined Contribution | Corporations, partnerships, limited liability companies | Yes | Low to High depending upon design complexity, service model adopted and other factors | The lesser of $16,500 for 2010 (Indexed for inflation each year) or 100% of compensation | |
| Solo 401(k) | Defined Contribution | Sole proprietorships, partnerships, limited ability companies and corporations with no common law employees | Yes | Low to Medium | The lesser of $16,500 for 2010 (Indexed for inflation each year) or 100% of compensation | |
| Safe Harbor 401(k) | Defined Contribution | Sole proprietorships, partnerships, limited liability companies and corporations | Yes | Low to Medium | The lesser of $16,500 for 2010 (Indexed for inflation each year) or 100% of compensation | |
| Simple 401(k) | Defined Contribution | Sole proprietorships, partnerships, limited liability companies and corporations with 100 or fewer eligible employees | Yes | Low to Medium | The lesser of $11,000 for 2010 (Indexed for inflation each year) or 100% of compensation | |
| Profit Sharing | Defined Contribution | Sole proprietorships, partnerships, limited liability companies and corporations | Yes | Low to High depending upon design complexity, service model adopted and other factors | None | |
| SEP IRA | IRA Based | Sole proprietorships, partnerships, and small businesses | Yes | Low | None. Contributions are generally by employer only | |
| SIMPLE IRA | IRA Based | Sole proprietorships, partnerships, limited liability companies and corporations with 100 or fewer employees | No | Employee and employer | Low | The lesser of $11,000 for 2010 (Indexed for inflation each year) or 100% of compensation |
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| Feature | Establishment deadline | Funding deadline |
| 401(k) | By the last day of the plan year for which the plan is effective | Employee contributions must be deposited as soon as administratively possible, but no later than 15 business days after the month in which the deferrals were made; employer contributions must be deposited by the time the corporate tax return (with extensions) is filed for the tax year in which the deduction is being taken |
| Solo 401(k) | By the last day of the plan year for which the plan is effective | Unincorporated businesses-employer/employee contributions: by the time the corporate tax return (with extensions) is filed for the tax year in which the deduction is being taken; incorporated businesses-employer contributions: by tax-filing date plus extensions and employee contributions must be deposited as soon as administratively possible, but no later than 15 business days after the month in which the deferrals were made |
| Safe Harbor 401(k) | Any date between January 1st and October 1st; may not have an effective date that is before the date plan actually adopted | Employee contributions must be deposited as soon as administratively possible, but no later than 15 business days after the month in which the deferrals were made; employer contributions must be deposited by the time the corporate tax return (with extensions) is filed for the tax year in which the deduction is being taken |
| Simple 401(k) | Any date between January 1st and October 1st; as soon as administratively possible for businesses established after October 1st | Employee contributions must be deposited as soon as administratively possible, but no later than 15 business days after the month in which the deferrals were made; employer contributions must be deposited by the time the corporate tax return (with extensions) is filed for the tax year in which the deduction is being taken |
| Profit Sharing | By the last day of the plan year for which the plan is effective | Contributions must be deposited by the time the corporate tax return (with extensions) is filed for the tax year in which the deduction is being taken |
| SEP IRA | Established by the time the corporate tax return (with extensions) is filed for the tax year in which the deduction is being taken | Funded by the time the corporate tax return (with extensions) is filed for the tax year in which the deduction is being taken |
| SIMLE IRA | Any date between January 1st and October 1st; as soon as administratively possible for businesses established after October 1st | Employee contributions must be deposited within 30 days after the end of the month in which the amounts would otherwise have been payable to the employee in cash; employer contributions must be deposited by the time the corporate tax return (with extensions) is filed for the tax year in which the deduction is being taken |
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| Can rollover to: | IRA | SIMLE IRA | Roth IRA | SEP IRA | Simple 401(k) #1 | Safe Harbor 401(k) #1 | 403(b) #1 | Govern-mental 457 #1 | 401(k) #1 | Roth 401(k) #5 | Minimum vesting | Loans | Roth Contri-butions Allowed |
| 401(k) | Yes | No | No | Yes | Yes #3 | Yes | Yes | Yes | Yes | No | Immediate on Employee Contributi-ons; Employer contribute-ons can be subjected to vesting schedule | Emp-loyer option | Yes #6 |
| Solo 401(k) | Yes | No | No | Yes | Yes #3 | Yes | Yes | Yes | Yes | No | Immediate | Emp-loyer option | Yes #6 |
| Safe Harbor 401(k) | Yes | No | No | Yes | Yes #3 | Yes | Yes | Yes | Yes | No | Immediate | Emp-loyer option | Yes #6 |
| Simple 401(k) | Yes | No | No | Yes | Yes #3 | Yes | Yes | Yes | Yes | No | Immediate | Emp-loyer option | Yes #6 |
| Profit Sharing | Yes | No | No | Yes | Yes #3 | Yes | Yes | Yes | Yes | No | Employer contributi-ons can be subjected to vesting schedule | Emp-loyer option | No |
| SEP IRA | Yes | No | Yes | Yes | Yes #3 | Yes | Yes | Yes | Yes | No | Immediate | No | No |
| SIMPLE IRA | Yes #2 | Yes #2 | Yes #2 | Yes #2 #3 | Yes #2 | Yes #2 | Yes #2 | Yes #2 | No | Immediate | No | No |
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| Feature | When can withdrawals be taken? |
| 401(k) | Withdrawals can generally be made for the following reasons:
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| Solo 401(k) | Withdrawals can generally be made for the following reasons:
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| Safe Harbor 401(k) | Withdrawals can generally be made for the following reasons:
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| Simple 401(k) | Withdrawals can generally be made for the following reasons:
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| Profit Sharing | Withdrawals can generally be made for the following reasons:
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| SEP IRA | Withdrawals can be taken any time; withdrawals taken prior to an employee reaching age 59(1/2) may be subject to IRS penalties; withdrawals are generally considered taxable income |
| SIMPLE IRA | Withdrawals can be taken any time; withdrawals taken prior to an employee reaching age 59(1/2) and within the first 2 years of participation, may be subjected to a 25% early withdrawal penalty; after 2 years, a 10% early withdrawal penalty would apply; withdrawals are generally considered taxable income |
- Even though a plan may accept rollovers, they are not required to do so. Hardship distributions cannot be rolled over.
- Only after the individual has participated in the SIMPLE IRA for two years.
- Some retirement professionals do not believe that the IRS Code permits such a rollover.
- There is an exception to this rule which allows an employee who retires during the calendar year in which they turn 55, or later, to withdraw without penalty.
- Roth 401(k) funds can only be rolled over to a designated Roth 401(k) account within 401(k) plan or to a Roth IRA.
- This is a design option that the plan may or may not permit.
