Investment Center
Products: Money Purchase Pension Plans
| Who may use | All types of businesses. |
| Who must be covered | Any employee with 1,000 hours of service within one year and who is age 21 or older. If immediate 100% vesting is offered, two years of service may be required. Can exclude certain employees. |
Annual contributions Required employer contribution |
Amount stated in plan document (same % contribution required each year). |
| Maximum contribution that the employer can deduct | 25% of employee’s pay (maximum eligible pay per employee is $200,000). |
| Maximum allocation to employee’s account | 100% of employee’s total pay or $40,000, whichever is less. |
| Maximum employee deferral | No deferrals allowed. |
| Vesting | Choice of immediate 100% vesting or a range of schedules. |
| Advantage | Fixed contribution required; easy to budget from year to year. |
Products: Profit Sharing Plans |
|
| Who may use | All types of businesses. |
| Who must be covered | Any employee with 1,000 hours of service within one year and who is age 21 or older. If immediate 100% vesting is offered, two years of service may be required. Can exclude certain employees. |
Annual contributions Required employer contribution |
Flexible contribution allowed each year (preset amount not required); however, employer must make “substantial and recurring” contributions. |
| Maximum combined contribution that the employer can deduct | 25% of total eligible payroll (maximum eligible pay per employee is $200,000). |
| Maximum allocation to employee’s account | 100% of employee’s total pay or $40,000, whichever is less. |
| Maximum employee deferral | No deferrals allowed without adding a 401(k) feature. |
| Vesting | Choice of immediate 100% vesting or a range of schedules. |
