Plans
Qualified Plan Description
There are two general types of pension plans — defined benefit plans and defined contribution plans. In general, defined benefit plans provide a specific benefit at retirement for each eligible employee, while defined contribution plans specify the amount of contributions to be made by the employer toward an employee’s retirement account. In a defined contribution plan, the actual amount of retirement benefits provided to an employee depends on the amount of the contributions as well as the gains or losses of the account.
Defined Benefit Pension Plan
This type of plan, also known as the traditional pension plan, promises the participant a specified monthly benefit at retirement. Often, the benefit is based on factors such as your salary, your age, and the number of years you worked for the employer.
Profit Sharing Plan
A profit sharing plan allows the employer each year to determine how much to contribute to the plan (out of profits or otherwise) in cash or employer stock. The plan contains a formula for allocating the annual contribution among the participants.
401(k) Plan
In this type of defined contribution plan, the employee can make contributions from his or her paycheck before taxes are taken out. The contributions go into a 401(k) account, with the employee often choosing the investments based on options provided under the plan. In some plans, the employer also makes contributions, matching the employee’s contributions up to a certain percentage. SIMPLE and safe harbor 401(k) plans have additional employer contribution and vesting requirements.
Cash Balance Plan
A cash balance plan is a defined benefit plan that defines the benefit in terms that are more characteristic of a defined contribution plan. In other words, a cash balance plan defines the promised benefit in terms of a stated account balance.
New Comparability – Rate Group Plan
A new comparability plan is a profit sharing plan that provides the maximum contribution flexibility for the employer. For example, a company may wish to contribute 15% of pay for Owners, 6% of pay for clerical staff and 5% of pay for janitorial staff. As long as the plan passes a nondiscrimination test, you may determine the amount of the contribution for each participant.
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CUSTOM PROPOSAL
Contact PPSS, Inc. today for a custom proposal to determine the appropriateness and feasibility of the retirement plan for your business.
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Los Alamitos
CA 90720
562-594-4051