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Saving for Retirement with Flexibility

Offering tremendous flexibility for both employer and employee, defined contribution programs are the centerpiece of most retirement benefit packages today.

A Plan Sponsor has many different plan variations to choose from depending on staff participation in the plan and the benefit the owner is looking to receive.  But that doesn’t mean the best approach is a one-size-fits-all, off-the-shelf solution.  Below are some design highlights plan sponsors need to know about:

Traditional 401(k) Plan – Great basic benefit.
Pros: Ultimate flexibility in providing a match or possibly no match at all.
Cons: The owner’s ability to defer or receive a contribution is based on staff participation levels.  Many times these plans require the owner and highly compensated staff to receive money back due to a failed test.

Safe Harbor 401(k) Plan – Ease of use.
Pros: No testing issues, so no refunds regardless of how much or how little staff defer.
Cons: Required employer match or non-elective contribution which is 100% vested.

Profit Sharing Plan – Almost always paired with a 401(k) plan.
Pros: Ability for owner to maximize his benefit ($54,000/$60,000 if age 50+) with the utmost flexibility in level of contributions provided to staff.
Cons: Minimum level of contributions are required to be provided to staff in order to pass nondiscrimination testing.

The Benefit Practice has the experience and expertise needed to successfully navigate the complex regulatory and compliance environment to design a plan that’s right for the employer and the employees.