BBI 401k Advisors believes that the increased benefits of a 401(k) plan are the best fit for most companies. In the past, small and mid size companies have been swayed from 401(k) plans, seeking for less benefit rich alternatives in an effort to cut down on fees.
With the Guardian Advantage 401(k) plan, BBI 401k Advisors is able to keep all the high end benefits of a 401(k) plan intact while still remaining exceptionally competitive in regards to pricing. This allows companies of all sizes to receive the best benefits for the owners and also their employees. Below is a chart that reviews some of the details of 401(k) plans and other employer sponsored retirement plans.
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401(k) Plans
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SIMPLE IRA
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SEP IRA
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Account Description
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A flexible plan offering the highest level of employee pre-tax contributions, a wide range of employer contribution options, and an optional loan provision.
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A plan that allows for both employer and employee contributions. No loan provision. Mandatory employer contribution.
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A plan that allows employers to make contributions in their own and employees behalf. Employees can not contribute. No Loan Provision. Mandatory employer contributions for all eligible employees.
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Maximum Annual Contribution
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Employer: Profit sharing and match: For tax year 2008: Up to 25% of compensation or $46,000 including employee contributions.
Employee: Up to 100% of compensation or $15,500 ($20,500 age 50 and older).
Combination may not exceed $46,000 (2008) or if age 50 and older, $51,000
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For tax year 2008
Employee: up to 100% of compensation or $10,500 ($13,000 age 50 and older).
Employer (Required): Employer must provide contributions of either dollar-for-dollar matching up to 3% of compensation for all active participants, or 2% of compensation to all eligible employees.
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2008 tax year: As a small business owner, you can contribute up to 25% of your compensation or $46,000 which ever is less.
Employer is required to contribute same percentage of salary for all eligible employees. Eligibility is as follows:
21+ years old.
Have at least 3 years of service in last 5 years.
Have earned at least $450 in compensation from the employer for the year.
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Tax Benefits
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Employers can deduct contributions from federal taxable income.
Employees can make pre-tax contributions.
Employers may choose to allow Roth 401(k) salary deferrals within their plan.
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Employers can deduct contributions from federal taxable income.
Employees can make pre-tax contributions.
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Employers can deduct contributions for yourself and your employees from your company's federal taxable income.
Employees can not contribute to this plan.
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Types of Investments
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Mutual Funds
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Stocks, bonds and mutual funds
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Stocks, bonds and mutual funds, savings accounts and CDs
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Withdrawal Penalties
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10% IRS early withdrawal penalty if withdrawn before age
59 ½ unless exception applies.
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25% IRS early withdrawal penalty during the first two years of the account. 10% thereafter if withdrawn before age 59 ½ unless exception applies.
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10% IRS early withdrawal penalty if withdrawn before age 59 ½ unless exception applies.
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Other
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Optional Loan provision allows employees to access their contributions in certain situations. Roth 401(k) deferrals allow employees to contribute on an after tax basis in addition to pre tax contributions.
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