< FAQs : What are the Most Common Types of Retirement Plans?
Click on the links below to compare the most common types of retirement plans.
| 401(k) Plan | Defined Benefit Plan | Profit Sharing Plans | Simple 401(k) Plans | |
|---|---|
| Who can establish? | Corporations, Sub-Chapter S, Self Employed, Sole Proprietorships, Non-Profit |
| Maximum eligibility requirements | 2 years of service with employer, 1,000 hours of credited service per year, and attainment of age 21 |
| Are contributions mandatory? | No |
| Contribution limits: Employer | The employers current year deduction is limited to 25% of compensation paid to all eligible participants.
Allocation limited to lesser of 100% of gross compensation or $46,000 per participant |
| Contribution limits: Individual | $15,500 salary deferral limit under IRC Section 402(g) |
| Catch-Up contributions for workers age 50 and older | $3,000 |
| When must the plan be established? | Prior to onset of employee deferrals |
| When must Employer contributions be made? | By tax filing date plus extensions |
| Who directs investments? | Employer/Trustee or plan may allow individual participant direction |
| Are loans available? | Yes |
| Vesting | 3 vesting schedules: immediate, cliff, graded |
| Distributions before age 59 1/2 | No tax penalty |
| Distributions after age 70 1/2 | Required minimum distributions; may not aggregate total; each plan separate; may waive if still working and less than 5% owner |
| How are distributions taxed? | Taxed as ordinary income |
| Eligible rollovers | Must have triggering event (e.g., plan termination, death, separation from service, disability, age 59 1/2) |
| Portability:Rollovers among plans |
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| Advantages |
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