Defined Contribution Plans

What is a 401(k) Plan?

401(k) plans allow business entities to sponsor a plan that gives both business owners and employees the option of deferring a portion of their own income to the plan. In addition, the plan may allow for strategic employer contributions in the form of a match and/or profit sharing contribution.


Roth 401(k) Plan

401(k) plans have the unique ability to offer Roth (post-tax) employee contributions to a plan. When Roth deferrals are made, the contributions and their earnings will be distributed tax-free if the distribution is “qualified”. 401(k) plans allow one to contribute a large sum of money in a given year compared to other Roth retirement savings vehicles.

Safe Harbor 401(k)

The Safe Harbor 401(k) plan is ideal for employers who wish to eliminate the burden of discrimination testing associated with the traditional 401(k) plan. This type of plan allows all employees to contribute up to the IRS annual indexed amount as long as certain “safe harbor” conditions are satisfied.

 

403(b) Plan

A 403(b) plan is a retirement arrangement for employers of nonprofit organizations that are exempt from federal income tax. They offer the ability for both employee and employer contributions with some distinct testing advantages.