Small Business Plans

Who it's for

• Self-employed individual or small business owner, including those with employees
• Available to sole proprietors, partnerships, C corporations,
  S corporations

• Self-employed individual or business owner with no employees other than a spouse
• Available to sole proprietors, partnerships, C corporations,
  S corporations

• Businesses with 100 or fewer employees and self-employed individuals
• Available to sole proprietors, partnerships, C corporations,
  S corporations
  

Key advantages

• Easy to set up and maintain
• Flexible annual funding requirements

• A 401(k) with potentially higher contribution limits than SEP IRA

• Salary deferral plan with less administration
• Electronic funding with customized contribution allocation for each participant

Who can contribute

• Funded solely by employer contributions

• Funded by employee deferrals and employer contributions

• Funded by employee deferrals and employer contributions

2018 employee contribution limits

• Not allowed

• Up to $18,500 in salary deferrals; $24,500 if age 50 or older

• Up to $12,500 in salary deferrals; $15,500 if age 50 or older

2019 employee contribution limits

• Not allowed

• Up to $19,000 in salary deferrals; $25,000 if age 50 or older

• Up to $13,000 in salary deferrals; $16,000 if age 50 or older

2018 employer contribution limits

• Up to 25% of compensation up to a maximum of $55,000

• Employers may contribute up to 25% of compensation up to a maximum of $55,000.

• Either match employee contributions up to 3% of compensation; can be reduced to 1% in any two out of five years or contribute 2% of each employee's compensation, up to $5,000

2019 employer contribution limits

• Up to 25% of compensation up to a maximum of $56,000

• Employers may contribute up to 25% of compensation up to a maximum of $56,000.

• Either match employee contributions up to 3% of compensation; can be reduced to 1% in any two out of five years or contribute 2% of each employee's compensation, up to $5,000

Administrative responsibilities

• No employer tax filings; employee notification for employer's contribution, if made

• Annual Form 5500 filing after plan assets exceed $250,000

• No employer tax filings;
  certain annual employee notifications must generally be made by November 1.

Access to assets

• Withdraw at any time, but a 10% penalty may apply if you are under age 59½.

• Cannot take withdrawals from the plan until a "trigger" event occurs, such as turning age 59½, disability, and/or plan termination

• Withdraw at any time, but a 10% penalty may apply if you are under age 59½. If the withdrawal is taken within first two years of participation in the plan, that penalty increases to 25%.

Plan setup deadlines

• Establish by employer's tax filing deadline, plus extensions, usually April 15.

• Establish by December 31 (or fiscal year-end).

• Establish by
  October 1.