Plan Comparison Chart (1)
|
Plan
Type
|
SEP
|
Simple
IRA
|
Simple
401 (k)
|
401
(k) (vesting schedule permitted)
|
|
Target Employer
|
All, but appeals to small employer (25 or fewer employees) | All (with 100 or fewer employees) | All (with 100 or fewer employees) including tax-exempts, but excluding government entities | All, including tax-exempts, but excluding government entities |
| Who must be covered? | Any employee employed for 3 out of last 5 years and who is age 21 or older. Can exclude certain employees. | Any employees earning $5,000 during any two preceding years and expected to earn $5,000 in current year. can exclude certain employees. | Any employee with 1,000 hours or service within one year and who is age 21 or older. Can exclude certain employees. | Any employee with 1,000 hours or service within one year and who is age 21 or older. can exclude certain employees. |
| Maximum amount of contribution (deferral plus match) | 15%
of compensation (up to $24,000) (All employer contribution, no deferral or match) |
$12,000 ( 2 ) ($6,000 deferral plus $6,000 maximum match) | $10,800 ($6,000 deferral plus $4,800 maximum match) | 15%
of compensation (up to $24,000 (
3 )) ($10,500 deferral plus match and employer contribution) |
| Maximum employee deferral | No deferrals allowed | $6,000, adjusted for cost-of-living increases | $6,000, adjusted for cost-of-living increase | $9,500, adjusted for cost-of-living increase |
| Required employer contribution | None | Dollar-for-dollar match of first 3% of gross compensation deferred or 2% of gross compensation for all eligible employees who earn $5,000 during the year ( 4 ) | Dollar-for-dollar match of first 3% of gross compensation deferred or 2% of gross compensation for all eligible employees who earn $5,000 during the year | None, unless plan is top-heavy |
| Vesting schedule | 100% immediate vesting | 100% immediate vesting | 100% immediate vesting | vesting schedule available |
| Testing required | Top-heavy
- Yes ADP - No 415 - Yes |
Top-heavy
- No ADP - No 415 - No |
Top-heavy
- No ADP - No 415 - Yes |
Top-heavy
- Yes ADP - Yes 415 - Yes |
| Who controls distributions? | Employee | Employee | Employer | Employer |
| Participants loans | N/A | N/A | Yes | Yes |
| Establishment date | Tax-filing deadline, including extensions | Anytime between January 1 and Oct 1 | Anytime between January 1 and Oct 1 | Last day of plan year |
| Funding date for deduction | Tax-filing deadline, including extensions | Tax-filing deadline, including extensions | Tax-filing deadline, including extensions | Tax-filing deadline, including extensions |
| Disclosure and reporting | Plan summary | Plan summary | Summary plan description/5500 | Summary plan description/5500 |
| Cost | $10 per Social Security number | $10 per Social Security number | Trust and recordkeeping fee | Trust and recordkeeping fee |
PrevisionsThis information is based on the current law, which may subsequently be changed by IRS regulations and/or technical correction.
(1)
American Funds Distributions, Inc. also offers profit-sharing and money
purchase plans.
(2) The $160,000 compensation limit does not apply to SIMPLE IRA matching
contributions.
(3) Up to 20% of net compensation, or $60,000, whichever is less, may be
allocated to a participant's account.
(4) match may be lowered to 1% of gross compensation for two out of five
years.