RETIREMENT PLAN - COMPARISON TABLE
| COMPARISON TABLE | SIMPLE 401(k) | SIMPLE IRA | Safe Harbor 401(k) | Traditional 401(k) |
| Employer Eligibility | employers with no more than 100 employees earning at least $5,000 in the preceding year, except governmental and tax exempt | employers with no more than 100 employees earning at least $5,000 in the preceding year | all employers except state and local government | all employers except state and local government |
| Use of Other Qualified Plans | no other qualified plans can be used unless they are for employees not covered by the SIMPLE 401(k) | no other retirement plan except for union members | other qualified retirement plans permitted | other qualified retirement plans permitted |
| Employee Eligibility | 1 year of service (where employee worked at least 1,000 hrs.) and over age 21 | employee must have earned at least $5,000 annually in any 2 prior years or current year | 1 year of service (where employee worked at least 1,000 hrs.) and over age 21 | 1 year of service (where employee worked at least 1,000 hrs.) and over age 21 |
| Types of Contributions | employee deferrals | employee deferrals | employee deferrals | employee deferrals |
| -employer match or non-elective contributions | -employer match or non- elective contributions | -employer match or non-elective contributions | -employer match -employer fixed or discretionary contributions | |
| Elective Deferral Limit | $9,000 (2004) | $9,000 (2004) | $13,000 (2004) | $13,000 (2004) |
| Employer Contribution | mandatory | mandatory | mandatory | discretionary |
| Amount of Employer Contribution and Matching | either: | either: | either: | none unless a 3% top-heavy minimum is required |
| -a 100% match on first 3% of compensation; or 2% of compensation (without matching) for all eligible employees | -a 100% match on first 3% of compensation; | -100% match on first 3% of compensation and a 50% match on 3% to 5% of compensation; or 3% of pay non-elective contribution for each eligible employee | -employer limited to 25% of eligible payroll for total employee and employer contribution | |
| or 2% of compensation (without matching) for all eligible employees | -employer limited to 25% of eligible payroll for total employee & employer contribution | |||
| Catch-Up Contributions for Participants Age 50 and Up | $1,500 in 2004, increasing in $500 increments to $2,500 in 2006 | $1,500 in 2004, increasing in $500 increments to $2,500 in 2006 | $3,000 in 2004 increasing in $1,000 increments to $5,000 in 2006 | $3,000 in 2004 increasing in $1,000 increments to $5,000 in 2006 |
| Vesting on Employer Contributions | 100% immediate | 100% immediate | 100% immediate | 3 year cliff or 2/6 on employer matching contributions |
| Loans and Withdrawals | -hardship withdrawals and loans permitted | -no restrictions on withdrawals, but 25% on premature withdrawals first two years | -hardship withdrawals and loans permitted | -hardship withdrawals and loans permitted |
| -10% tax on withdrawals prior to 59½ | -loans are considered withdrawals | -10% tax on withdrawals prior to 59½ | -10% tax on withdrawals prior to 59½ | |
| Administration Cost and Complexity | -low | -low | -relatively low | -relatively high ADP, ACP and top-heavy testing |
| -no ADP, ACP or top-heavy | -no ADP, ACP or top-heavy | -no ADP, ACP (for matching), or top-heavy | -vesting recordkeeping | |
| -no vesting records | -no vesting records | |||
| -no 5500 annual report |
Contact us for more information regarding these plans