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"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.  Access to additional information on the specific benefit or feature is underlined in blue

Benefit or Feature

SEP

SIMPLE

 IRA

SIMPLE

 401(k)

Qualified Retirement Plan

Profit Sharing (PS)

PS w/401(k)

Defined Benefit

Maximum Participant Eligibility Conditions

Any year earning $450 in 3 of prior 5 years (2005 limit)

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

in current year

Age 21; 1 year of service (1,000 hrs.)

Age 21; 2 years of service (1,000 hrs.) Age 21; 1 year of service (1,000 hrs.)

for 401(k) only

2 years of service (1,000 hours); Age 21

Maximum Elective Employee Contribution (IRC 402(g))

Not Applicable

Lesser of 100% of compensation or $10,000 (2005) 

Lesser of 100% of compensation or $10,000 (2005) 

Not Applicable

Lesser of 100% of compensation or $14,000 (2005)

Not Applicable

Catch-up (age 50+)

None

$2,000 (2005)

$2,000 (2005)

None $4,000 (2005) None

Employer Match

Not Applicable

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

Required: 100% of 1st 3% (may not reduce) 

Not Applicable May be fixed or discretionary Not Applicable

Employer Contribution

Discretionary

Required: 2% of Total Compensation

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 available with  IRS Model SEP)

Salary

Proportionate

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)

Automatic Pass of  ADP/ACP Test

Not Applicable

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

100% Immediate

3/20 graded or

 5 year cliff

Employer match:

2/20 graded or

 3 year cliff

3/20 graded

or 5 year cliff

Withdrawals

Penalty free after

age 59 or Death

Penalty free after

age 59 or Death

Penalty free after

age 59 or Death

Retirement, Death or Disability, In-Service, Hardship (may be subject to add'l tax) Retirement, Death or Disability, In-Service, Hardship (may be subject to add'l tax) Retirement, Death or Disability, In-Service, Hardship (may be subject to add'l tax)

Participant Loans

Not Permitted

Not Permitted

Not Permitted

Permitted within Limits Permitted within Limits Permitted within Limits

Last Day of Plan Year Employment Condition

Not Permitted

Not Permitted

Not Permitted

Permitted but subject to minimum coverage rules

Permitted but subject to minimum coverage rules

Permitted but subject to minimum coverage rules

Participant-Directed Investments

Required

Required

Required

Optional but

not required

Optional but

not required

Not Permitted

Life Insurance as a Plan  Investment

Not Permitted

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 years

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

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

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2003-2005 Milberg Consulting LLC  All Rights Reserved

We intend the information in this publication as a general resource, not as legal or plan design advice or counsel. Before you include or exclude any benefits or features shown above in your plan, we suggest that you consult a tax or ERISA professional. Milberg Consulting LLC and Barry R. Milberg do not warrant and are not responsible for any errors and omissions from this information.