401(k) Retirement Plans

401(k) is simply the part of the tax code that allows an employer to establish a cash-or-deferred arrangement (also called salary deposit) feature in a profit sharing plan for the benefit of the covered employees.

• Employees contribute through salary deposits on a pre-tax basis up to $15,500.
• Employer can provide matching contributions to employee accounts.
• Employer can also make Discretionary contributions under the Profit Sharing rules.
• Matching and Profit Sharing contributions can vary from year to year.
• Sum of all contributions can be as much as $46,000.
• Contributions are tax deductible to the employer.
• Vesting schedules can apply to matching and to discretionary contributions.
  (All Employee contributions are immediately vested.)
• New employees can “rollover” prior 401(k) balances from their former employer’s plan.
• Catch-up provisions for individuals who have reached 50 yrs. of age and already made the maximum allowable pre-tax deferral, may make an additional $5,000 catch-up contribution.

Maximum Eligibility:

• 21 Years of age.
• 1 Year of Service (2 years if 100% vested).
• Full Time (1,000 hrs/year. This requirement is available if the Service requirement is 1 year.)
• May exclude collectively bargained employees.
• May exclude non-resident employees with no U.S.-source income. (e.g.: a foreign subsidiary)