Qualified Plan Choices

Choosing the right retirement plan for your business is extremely important. There are many different types of retirement plans that are available. There are advantages and disadvantages to each plan design.

Common considerations concerning all plan designs:

Eligibility

Vesting

Participation

Contribution limits for employer and employees

Distributions including hardships and loans

Formulas for contributions

Employee education

Investment choices

Compliance with Department of Labor and IRS regulations

Costs of plan administration including the time you and your employees spend on the plan.

Additionally, each employer should consider the following:

Will your plan really be looked upon by employees as a valuable benefit that is really part of their compensation?

Will this plan help retain and attract employees?

Will it benefit your key employees as much as you would like?

What is the true annual cost of your plan?

How much liability do you have for sponsoring a retirement plan?

Do your employees really understand your retirement plan? Do they understand vesting, asset allocation, plan loans, hardships, rollovers, contribution limits, eligibility, matching or non-elective contributions, and how to invest their money?

Which plan is the right one for your business – Profit sharing, 401(k), defined benefit, money purchase pension, ESOP, SEP, Simple?

Do your employees have a plan for their retirement?

Should employer contributions be discretionary or fixed?

What formula should be used to allocate employer contributions? Choices include matching based on seniority, salary, or graded. Profit Sharing can be allocated based on classes, social security wage base, salary proportional, point system, or age based.

Is a Safe Harbor Plan appropriate?

Oval: Pension Analysis Bureau Retirement Education Center