These various plan types can be used for varying goals and stages within a business. For example, a business may start with one plan type and then evolve over time. Other times features of plan types may not be available. For a complete analysis, please contact us and we’d be happy to work on design proposals in further detail. Rates and limits reflect what is available in 2019.

Savings Incentive Match Plan for Employers (SIMPLE) Individual Retirement Account (IRA):

Deferrals: Capped at $13k if participant is under 50 years old age; $3k allowable as catch-up if 50 or over.

Employer contributions: Required either 2% of pay non-elective or 3% of pay match; can reduce the match to 1% of 2 out of 5 years

Vesting: 100% immediately vested

Anti-alienation protection: None. Only state laws apply in IRA protection (for example, in Washington State, only protection is up to $1M in the case of bankruptcy).

Availability: Businesses with fewer than 100 employees

Eligibility: Minimum immediate; maximum 2 years employed (does not need to be consecutive) and employee earning at least $5k.

Can employer sponsor another retirement plan at the same time: No

SIMPLE 401(k):

Deferrals: Same as SIMPLE IRA

Employer contributions: Same as SIMPLE IRA

Vesting: Same as SIMPLE IRA

Anti-alienation protection: Full ERISA protection meaning that assets cannot be penetrated because of lawsuits, bankruptcy or IRS interest/taxes/penalties.

Availability: Same as SIMPLE IRA

Eligibility: Same as SIMPLE IRA

Can employer sponsor another retirement plan at the same time: No

Traditional 401(k):

Deferrals: $19k if participant is under 50 years old age; $6k allowable as catch-up if 50 or over and may be pre-tax or Roth.

Employer contributions: Can be designed from nothing up to employer contributions passing all compliance tests.

Vesting: Can be maximum 6-year graded schedule in discretionary contributions; can be maximum 2-year cliff in Qualified Automatic Contribution Arrangement (QACA) Safe Harbors.

Anti-alienation protection: Same as SIMPLE 401(k).

Availability: Any employer.

Eligibility: Minimum immediate; maximum age 21, 1 year of service in which the participant works 1,000 hours and semi-annual entry.

Can employer sponsor another retirement plan at the same time: Yes depending on plan type.