Qualified Plans
Our goal at BPI is to help YOU market small business retirement plans and to keep the process SIMPLE for you and your client! This is the time to be in the pension market. New tax laws contain many provisions to encourage the purchase of pension and profit sharing plans. Let us help you make the most of the renewed interest in small business pension plans!
Advanced Concepts – Qualified Plans 412(e)(3)
Qualified Plan Marketing Materials
Enhanced Confidential Census
Plan Comparison Chart
| Plan Type | 401(k) | Safe Harbor 401(k) |
Simple 401(k) |
Simple IRA | Profit Sharing |
SEP IRA | Money Purchase | Defined Benefit | 412(e)(3) |
|---|---|---|---|---|---|---|---|---|---|
| Target Market | 1 + Employee | 1 + Employee | No more than 100 employees that earned more than $5000 in prior year | No more than 100 employees that earned more than $5000 in prior year | Business with fluctuating earnings and self-employed | Small businesses and self-employed | Business with high stable earnings and self employed | Business with stable earnings and owners close to retirement and self-employed | Business with stable earnings and owners close to retirement and self-employed |
| Key Features | Tax-Deferred investing; flexibility in plan design; investment flexibility | Tax-Deferred investing; no discrimination testing; investment flexibility | Tax-Deferred investing; no discrimination testing; investment flexibility | Tax-Deferred investing; no discrimination testing; investment flexibility | Flexible Contributions; investment flexibility | Investment flexibility | Consistent contributions; investment flexibility | Consistent contributions | Maximum consistent contributions |
| Contributors | Employee and optional Employer | Employee and Employer | Employee and Employer | Employee and Employer | Employer Only | Employer Only | Employer Only | Employer Only | Employer Only |
| Contribution Flexibility |
Yes | No; Possible additional employer contributions above safe harbor | No | Very Limited | Yes | Yes | No; Percentage established at plan set up | No; Based on formula | No; Based on formula |
| Max Eligibility Requirements |
Age 21 and 1 year of service | Age 21 and 1 year of service | Age 21 and 1 year of service | Employees earning $5000 in current year and any 2 prior years | Age 21 and 1 year of service (2 Years with 100% vesting) | Age 21 with any service in 3 of last 5 years | Age 21 and 1 year of service (2 Years with 100% vesting) | Age 21 and 1 year of service (2 Years with 100% vesting) | Age 21 and 1 year of service (2 Years with 100% vesting) |
| Max Annual Salary Deferral |
$16,500 w/$5500 catch up contributions | $16,500 w/$5500 catch up contributions | $11,500 w/$2500 catch up contributions | $11,500 w/$2500 catch up contributions | Not Applicable | Not Applicable | Not Applicable | Not Applicable | Not Applicable |
| Max Annual Employer Contribution |
25% of eligible employee compensation | 3-4% safe harbor; option additional contribution either matching or non-elective (total 2.5% of eligible compensation) | 100% up to 3% match to participants or 2% to all eligible employees | 100% up to 3% match to participants or 2% to all eligible employees | Up to 25% of eligible employee compensation; limited to $49000 per eligible employee (2011) | 25% of eligible employee compensation | Up to 25% of eligible employee compensation; limited to $49000 per eligible employee (2011) | Amount needed to fund plan | Amount needed to fund plan |
| Vesting in Employer Contribution |
May be graded up to 6 years or 100% after 3 years | 100% immediately | 100% immediately | 100% immediately | May be graded up to 6 years or 100% after 3 years | 100% immediately | May be graded up to 6 years or 100% after 3 years | May be graded up to 6 years | May be graded up to 6 years |
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