If you’re establishing a new retirement plan, selecting the appropriate design is the first step in providing this important benefit. If you’re reviewing your business’s existing plan, you’ll need to determine whether your company’s and participants’ needs have changed since you implemented the plan.
Because large corporations spearheaded the growth of 401(k) plans, many closely held business owners assume this type of plan won’t suit their companies’ needs. However, the implementation of the safe-harbor 401(k) provisions, in addition to other legislation, changes how businesses of all sizes are implementing 401(k) plans.
In general, 401(k) plans help employees fund their retirement by deferring a portion of their salaries into the plan on a pretax basis. Employees also may have the ability to make salary deferral contributions on an after-tax basis as a Roth contribution.* As the employer, you can also make contributions, which are a tax-deductible business expense, on behalf of eligible employees. These contributions can match employee contributions, be employer discretionary profit sharing contributions, or be a combination of the two.
Types of plans, profit sharing contribution allocation, eligibility criteria, vesting schedules, deadlines and rules vary from plan to plan.
We are here to help. If you would like a complimentary review of your existing plan, or want to discuss options for a new plan, please contact us at (303) 850-7900.
*The employer plan document must be amended to allow for the Roth 401(k) feature.