| If you are concerned about: |
Plan Consideration: |
Minimizing Cost |
A Payroll deduction IRA, SIMPLE IRA, SEP, Individual
401(k) or some traditional Profit-Sharing plans, which are the
lowest cost plan options available. |
|
Minimizing Plan Administration |
A Payroll deduction IRA, SIMPLE IRA, SEP, Individual
401(k) are the easiest plans to set up. All involve minimal paperwork.
Also Safe Harbor 401(k)s involves less administration than other
qualified plan options. |
|
Tax-sheltering maximum $$$$$ |
A Defined Benefit plan such as the Individual DB,
permits you to fund for a maximum annual benefit or $185,000.
Also, Profit-sharing plans allow for contributions of up to 100%
of compensation or $44,500 (2007). |
|
Plan Contributions by employees |
A SIMPLE IRA, Safe Harbor 401(k) are the only retirement
plan options that permit employees to make salary deferral contributions
to the plan. A Payroll deduction IRA is funded only by employees |
|
Financial commitment each year |
SIMPLE IRA, Safe Harbor 401(k), Defined Benefit
and Super Comp Profit Sharing plans all feature mandatory employer
contributions. They should be only considered if you can make
a financial commitment to the plan each year. |
|
Seasonal/part-time employees |
A Profit-sharing plan, Defined Benefit Plan or Traditional
401(k) plans allow you to set up vesting schedules that require
a certain period of employment before employees have access to
employer contributions. |
|
Excluding part-times from plan |
A Profit-sharing plan or Traditional 401(k) allows
you to set up stricter eligibility requirements for entering the
plan. This often results in excluding all or some part-timers. |
|
Rewarding highly compensated |
A Nonqualified Deferred Compensation plan allows
for the highest employee contributions, followed by a Defined
Benefit plan. Age-weighted, New Comparability and Super Comp plans
allow for larger contributions by higher paid owners and employees.
Defined Benefit plans, SEP’s and Profit-Sharing plans all
permit Social Security integration, which generates a higher contribution
percentage for higher paid employees. |
|
Having more than 100 employees |
Exclude SIMPLE IRA, which is limited to businesses
with 100 or fewer employees. All other plans, including the 401(k),
may be possible options. |
