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Retirement Plan Knowledgebase

"Available Benefits and Features" Comparison Chart

The chart below illustrates the benefits and features that are available for the plan types shown.  This chart is intended as a guide only.  Be mindful that many of the features shown below indicate the maximum parameters under which they may apply or operate (e.g., participant eligibility conditions, employer contribution vesting schedule).  The extent to which you may wish to apply the available parameters depends on the employer/plan sponsor's individual facts and circumstances.  We suggest that you consult a pension professional before selecting to include or exclude any specific benefit or feature in your plan. 

Benefit or Feature

SEP

SIMPLE

 IRA

Qualified Retirement Plan

Profit Sharing (PS)

PS w/401(k)

Defined Benefit

Maximum Participant Eligibility Conditions

Any year earning $550 in 3 of prior 5 years (2011)

$5,000 in 2 prior; $5,000 expected in current year

Age 21; 2 yrs of service (1000 hrs)

Age 21; 1 yr of service (1000 hrs)

for 401(k) only

Age 21; 2 yrs of service (1000 hrs)

Maximum Elective Employee Contri-bution (IRC §402(g))

Not Applicable

Lesser of 100% of compensation or $11,500 ('11)

Not Applicable

Lesser of 100% of compensation or $16,500 (2011)

Not Applicable

Catch-up (age 50)

None

$2,500 (2011)

None

$5,500 (2011)

None

Employer Match

Not Applicable

Required

100% of 1st 3% (may reduce to 1% in 2 of 5 yrs)

Not Applicable

May be fixed or discretionary

Not Applicable

Employer Contribution

Discretionary

Required  

2% of Total Compensation

Discretionary but may require Top-heavy minimum contribution

Discretionary but may require Top-heavy minimum contribution

Required contribution based on plan formula

Employer Contribution Allocation or Benefit Determination Methods

Salary Proportionate; Integrated with S.S.

  (not with  IRS Model SEP)

Salary

Proportionate

Salary Proportionate; Integrated w/S.S.; class or age-based

Salary Proportionate; Integrated w/S.S.; class or age-based

Fixed Benefit;

Unit Benefit;

Class-based;

Cash Balance

"Safe Harbor"   401(k) Auto-matically Passes ADP/ACP Test

Not Applicable

Not Applicable

Not Applicable

     Required         100% vested 3% employer cont. or match equal to 100% of 1st 3%, 50% of next 2%

Not Applicable

Maximum Vesting for Employer Contributions

100% Immediate

100% Immediate

2/20 graded or

 3-year cliff

Employer match:

2/20 graded or

 3-year cliff

2/20 graded

or 3-year cliff;

3-year cliff only for Cash Balance

Withdrawals

Penalty free after age 59½ or Death

Penalty free after age 59½ or Death

Retirement, Death or Disability, In-Service, Hardship (may be subject to 10% additional tax)

Retirement, Death or Disability, In-Service, Hardship (may be subject to 10% additional tax)

Retirement, Death or Disability, In-Service, Hardship (may be subject to 10% additional tax)

Participant Loans

Not Permitted

Not Permitted

Permitted within Limits

Permitted within Limits

Permitted within Limits

Last Day of Plan Year Employment Condition

Not Permitted

Not Permitted

Permitted subject to minimum coverage

Permitted subject to minimum coverage

Permitted subject to minimum coverage

Participant-Directed Investments

Required

Required

Optional but

not required

Optional but

not required

Not Permitted

Life Insurance as  a Plan  Investment

Not Permitted

Not Permitted

Permitted

Permitted

Permitted

Accepts transfer from qualified plan, IRA, SEP, SIMPLE, 403(b), 457(b)

Yes; SIMPLE IRA 25% penalty if distributed before 2 yrs

From another

SIMPLE IRA only

Yes; SIMPLE IRA 25% penalty if distributed before 2 years

Yes; SIMPLE IRA 25% penalty if distributed before 2 years

Yes; SIMPLE IRA 25% penalty if distributed before 2 years

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The information provided is intended as a general resource, not as investment or retirement planning, or legal plan compliance advice or counsel.  If you consider any actions discussed in this update, we suggest that you consult a qualified planning, tax or ERISA professional. ERISA Expertise LLC and Barry R. Milberg do not warrant and are not responsible for any errors and omissions from this update. Any tax advice included in this written or electronic communication is not intended or written to be used, and it cannot be used, by the taxpayer for the purpose of avoiding any penalties that may be imposed on the taxpayer by any governmental taxing authority or agency.