Search | Sitemap | Terms of Use | Privacy Policy | Contact Us

Retirement Plan Knowledgebase

"Compliance Requirements & Limits" Comparison Chart

The chart below illustrates the compliance requirements and limits that apply for the plan types shown. This chart is intended as a guide only. Be mindful that many of the requirements and limits interrelate with each other (e.g., individual maximum annual addition/benefit limitations and employer deduction limit). We suggest that you consult a pension professional before selecting any plan type shown below.  

Compliance
Requirements
& Limits
SEP SIMPLE IRA Qualified Retirement Plan
Profit Sharing (PS) PS w/401(k) Defined Benefit
Employer Conditions None 100 Employee Limit None None None
Plan Document IRS Model Plan  (Form 5305-SEP) or Individual Plan IRS Model Plan (Form 5305-SIMPLE) or Individual Plan Qualified Plan Document Qualified Plan Document Qualified Plan Document
Plan must be established by Due date of employer tax return or extension By October 1 of calendar yr exception for new employer By end of plan year By end of plan year; Oct.1 if Safe harbor; exception for new employer By end of plan year
Exclusive Plan No Yes No No No
Employees of Affiliated or Related Employers Must include Must include May exclude by applying minimum coverage rules May exclude by applying minimum coverage rules May exclude by applying minimum coverage rules
Coverage Testing Not Applicable Not Applicable Applicable Applicable Applicable
Nondiscrimination Tests Not Applicable Not Applicable Applicable Applicable Not Applicable
Top heavy Rules Not Applicable Not Applicable Applicable Applicable Applicable
Individual Maximum Annual Addition & Benefit Limits (IRCĀ§415) For 2011, lesser of 100% of comp or $49,000 Participant limit plus employer contribution For 2011, lesser of 100% of comp or $49,000 For 2011, lesser of 100% of comp or $49,000; 401(k) catch-up excluded For 2011, lesser of 100% of high 3-yr avg. compensation or $195,000
Participant Contribution Limit N/A $11,500 plus $2,500 if age >50 N/A $16,500 plus
$5,500 if age >50
N/A
Compensation Dollar Limit $245,000 $245,000 for Non-elective; None for Match $245,000 $245,000 $245,000
Employer Deduction Limit (IRCĀ§404) 25% of aggregate employee compensation Participant limit plus 2% ER Contribution; or 3% ER Match 25% of aggregate employee compensation 25% of aggregate employee compensation; 401(k) not considered Based on plan formula subject to applicable limits
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

Back to previous page

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.