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Mini(k)Plan Knowledgebase

"Compliance Requirements & Limits" Comparison Chart

The chart below illustrates the compliance requirements and limits that apply for the plan types shown. This chart is intended as a guide only. Be mindful that many of the requirements and limits interrelate with each other (e.g., individual maximum annual addition/benefit limitations and employer deduction limit). We suggest that you consult a pension professional before selecting any plan type shown below.  

Compliance
Requirements
& Limits

SEP

SIMPLE

 IRA

Qualified Retirement Plan

Profit Sharing (PS)

PS w/401(k)

Defined Benefit

Employer Conditions

None

100 Employee Limit

None

None

None

Plan Document

IRS Model Plan  (Form 5305-SEP) or Individual Plan

IRS Model Plan (Form 5305-SIMPLE) or Individual Plan

Qualified Plan Document

Qualified Plan Document

Qualified Plan Document

Plan must be established by

Due date of employer tax return or extension

By October 1 of calendar yr exception for new employer

By end of

plan year

By end of plan year; Oct.1 if Safe harbor; exception for new employer

By end of

plan year

Exclusive Plan

No

Yes

No

No

No

Employees of Affiliated or Related Employers

Must include

Must include

May exclude by applying minimum coverage rules

May exclude by applying minimum coverage rules

May exclude by applying minimum coverage rules

Coverage Testing

Not Applicable

Not

Applicable

Applicable

Applicable

Applicable

Nondiscrimination Tests

Not Applicable

Not

Applicable

Applicable

     Applicable

Not Applicable

Top heavy Rules

Not Applicable

Not

Applicable

Applicable

Applicable

Applicable

Individual Maximum Annual Addition & Benefit Limits (IRCĀ§415)

For 2011, lesser of 100% of comp or $49,000

Participant limit plus employer contribution

For 2011, lesser of 100% of comp or $49,000

For 2011, lesser of 100% of comp or $49,000; 401(k) catch-up excluded

For 2011, lesser of 100% of high 3-yr avg. compensation or $195,000

Participant Contribution Limit N/A

$11,500 plus

$2,500 if age >50

N/A

$16,500 plus

$5,500 if age >50

N/A

Compensation Dollar Limit

$245,000

$245,000 for Non-elective; None for Match

$245,000

$245,000

$245,000

Employer Deduction Limit (IRCĀ§404)

25% of aggregate employee compensation

Participant limit plus 2% ER Contribution; or 3% ER Match

25% of aggregate employee compensation

25% of aggregate employee compensation; 401(k) not considered

Based on plan

formula subject to applicable limits

Participant-Directed Investments

Required

Required

Optional but

not required

Optional but

not required

Not Permitted

Life Insurance as  a Plan  Investment

Not Permitted

Not Permitted

Permitted

Permitted

Permitted

Accepts transfer from qualified plan, IRA, SEP, SIMPLE, 403(b), 457(b)

Yes; SIMPLE IRA 25% penalty if distributed before 2 yrs

From another

SIMPLE IRA only

Yes; SIMPLE IRA 25% penalty if distributed before 2 years

Yes; SIMPLE IRA 25% penalty if distributed before 2 years

Yes; SIMPLE IRA 25% penalty if distributed before 2 years

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The information provided is intended as a general resource, not as investment or retirement planning, or legal plan compliance advice or counsel.  If you consider any actions discussed in this update, we suggest that you consult a qualified planning, tax or ERISA professional. ERISA Expertise LLC and Barry R. Milberg do not warrant and are not responsible for any errors and omissions from this update. Any tax advice included in this written or electronic communication is not intended or written to be used, and it cannot be used, by the taxpayer for the purpose of avoiding any penalties that may be imposed on the taxpayer by any governmental taxing authority or agency.