Third-Party Administration for 401(k) Plans
- Solo 401(k) Plans
- Roth 401(k) Plan
- Traditional 401(k) Plan
- Safe Harbor Plans
starting at $65 per year
through our preferred providers
401k Plan Features
| 401k Plans may be appropriate for | Public and private companies with stable earnings |
|---|---|
401k Tax benefits |
For employees: Tax-deferred growth potential and pre-tax contributionsFor employers: Tax-deductible contributions |
| Mutual Fund Fees | Vary by your company 401k plan design |
Key 401k advantages |
Flexible plan designOnline access to accounts through designated provider
Wide range of mutual fund options |
| Available features | Employer matching contributionsParticipant loans |
401k IRS maximum contribution |
Salary deferrals up to $18,000 for 2017 and $18,500 for 2018 |
401k Catch-up contributions |
Additional salary deferrals up to $6,000 for 2017 and 2018 for those age 50 or older |
| Administrative responsibilities | Filing of IRS Form 5500Special IRS testing to ensure plan does not favor highly compensated employees
Various employee notices regarding distributions and other events |
| Withdrawals | Vary by plan, fees may apply with taking a 401k loan |
Types of 401k Plans?
There are a few types of 401k Plans that can be designed according to your business. If your a solo business owner, partnership regardless of size you do have options.
4 main types of 401k plans.
- Solo 401k Plans
- Traditional 401k Plans
- Roth 401k Plans
- Safe Harbor 401k Plans
What is a 401k Plan?
A 401k retirement savings plan which is provided for by an employer. Retirement plans such as a 401k provides employers and employees the ability to save and invest a piece of their paycheck before taxes are taken out. Taxes aren’t paid until the money is withdrawn from the account.
Solo 401k Plan
A Solo 401(k) is a retirement savings plan designed for self- employed individual business owners. Usually a Solo 401k Plan provides higher contributions limits than a SEP or SIMPLE plan while providing the same tax benefits of a regular 401k without the high fees and standard company employer/employee structure. When it comes to 401k plans, they provide similar features of a larger company’s 401k plan and a profit sharing plan.
401k Plans must be set up by the end of the business’ fiscal year, generally, December 31st.
Traditional 401k Plans
Traditional 401k Plans in simple terms helps employers and employees who are enrolled and contributing retirement dollars to their accounts help defer taxes until withdrawn.
Roth 401k Plans
A Roth 401k is similar to the traditional 401k. The main difference is contributions that are put aside by an employer or employee into their account are after tax dollars. Meaning that taxes will be paid now from each pay check, and once taxes are taken out of each pay check those remaining dollars will then go into the retirement account with after tax dollars.
Safe Harbor 401k Plans
What is a Safe Harbor 401k Plan?
A Safe Harbor 401k retirement plan is one of the more popular 401(k) retirement plan for businesses with employees. Safe Harbor plans provides an easy to administer and simple way for business owners to maximize contributions to their own accounts while reducing some of the limitations associated with adhering to IRS non-discrimination testing.
Avoid IRS 401k Plan Testing
In order to avoid non-discrimination testing, your company or business will need to contribute to both the employer/business owners 401(k) account and each employees’ accounts enrolled. Companies that select a Safe Harbor plan must either:
- Contribute a dollar-for-dollar match for all participating employees, on the first of each employee’s compensation OR
- Contribute dollar-for-dollar of the employee’s compensation for each enrolled employee, regardless of whether the employee chooses to participate in the plan.
Safe Harbor plans work well for companies that have consistent streams income streams. Those businesses who have a difficult time to maintain matching funds year-round might find that a 401(k) plan without Safe Harbor may make more sense.