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PROFIT SHARING |
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Type of Business |
¨
Employer willing to make contributions ¨
Business owners or self-employed individuals |
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Features and Advantages |
¨
Contributions are tax-deductible to the company ¨
Contributions are based on profits ¨
Investments may be employer-directed |
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Administration |
Top-heavy testing, 415 testing, and IRS 5500 reporting |
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Establishment |
Calendar/fiscal year-end.
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Eligibility |
Full-time employees age 21 and over with one year of
service |
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Vesting |
Graded or
cliff schedules available |
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Annual Compensation Limit |
$200,000 |
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Maximum Employee Contributions |
Not
permitted |
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Maximum Employer Contributions |
¨
Cannot exceed the lesser of 15% of compensation, or
$40,000 per participant ¨
Limited to $25,500 based on annual compensation limit |
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Mandatory Minimum Distributions |
¨
Begin by age 70 ½ ¨
Taxed as ordinary income |
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Distributions Before Age 59 1/2 |
10 % penalty in addition to ordinary income taxes for
distributions (Exceptions may apply) |
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Distributions After Age 59 1/2 |
¨
Pre-tax contributions and earnings are taxed as ordinary
income unless rolled over to another plan or an IRA if participant is not
working ¨
If participant is still working, plan must allow for
hardship withdrawals to access money |
Loans
|
Permitted |