Retirement Plans

Whether you are a sole proprietor, partnership or a corporation there are several types of retirement plans that can meet your needs.  A retirement plan can serve many purposes, from tax sheltering income to attracting and retaining employees.

Click Here to compare the Annual Plan Limits for each plan option.

Here is general information about the most popular types of retirement plans.  We can help you choose the plan that is best for you.

Profit Sharing Plans

  • Profit Sharing Plans are one of the most flexible retirement plans available.  They offer you the most flexibility when it comes to making contributions.  Company contributions are usually made on a discretionary basis and can be determined on an annual basis.  The contribution is usually allocated to employees in proportion to compensation and may be integrated with Social Security.
  • Profit Sharing Plans can be designed on many factors and can include a formula that is based on the age of a participant.  This gives the older employees a bigger contribution since they are closer to retirement age.

401(k) Plans

  • A 401(k) Plan gives your employees the opportunity to save additional funds for retirement.  Employees elect to make contributions through payroll deductions up to an annual maximum limit ($17,000 for 2012).  The plan can also allow employees over the age of 50 to make an additional "catch-up" contribution up to an annual maximum limit ($5,500 for 2012).
  • Often the employer will match a portion of the amount deferred by the employee.  Because a 401(k) plan is a type of profit sharing plan, profit sharing contributions may be made in addition to or instead of matching contributions.
  • Can be designed as a "Safe Harbor 401(k) Plan" with the employer guaranteeing a certain contribution to the employees each year.  This will allow the plan to avoid nondiscrimination testing and the highly compensated employees the ability to defer at much higher percentages.

New Comparability Plans

  • New Comparability Plans are profit sharing plans that test their contributions as though they were defined benefit plans.  When the plan uses this method, certain employees may receive much higher allocations than would be permitted normally.  These plans are commonly referred to as cross-tested plans.

ESOP Plans

  • An Employee Stock Ownership Plan (ESOP) is a defined contribution plan that allows employees to become owners of stock in the company they work for.  In simplest terms, an ESOP is a plan that is designed to primarily be invested in stock or other securities issued by the employer.
  • To qualify for favorable tax treatment, an ESOP needs to satisfy the specific requirements in the tax law.  If it does, your company will gain the tax deductions and other benefits.  Your employees will gain a continuing tax deferral, plus a motivation to help the company prosper.

Cash Balance Plans

  • A cash balance plan is a defined benefit plan that resembles a defined contribution plan in that participants have hypothetical account balances.  Each employee's account receives an annual contribution credit and specified interest credit based on a guaranteed rate.  At retirement, the employee's benefit is equal to all of the contributions and interest credits.