Retirement Strategies LLC, Little Chute Wisconsin

401(k) Plans

A 401(k) Plan allows employees to elect to defer a portion of their compensation for retirement. The portion contributed to the plan is tax deferred, meaning the employee only pays taxes on their deferral contributions at the time their funds are withdrawn from the plan (certain restrictions apply to distributions from a qualified retirement plan).

These plans may also contain a discretionary matching option, where the employer elects to contribute a portion of what the employee has elected to defer. Matching contributions may be subject to a vesting schedule and these plans are subject to various IRS non-discrimination rules.

DESIGN FEATURES

Who May Adopt?

Employers of all sizes

Employee Eligibility Requirements

Maximum Requirements:
	Age 21 and 1 year (1,000 hours) of service
* Less restrictive requirements allowed

Employee Deferral Contributions

Limited to:
	$15,500 (2008)
	$16,500 (2009)

Employer Matching Contributions

Any discretionary formula is allowed. Plans may provide that employees must be employed on the last day of the plan year and must work up to 1000 hours to receive a contribution.

Employer Profit Sharing Contributions

Discretionary formulas allowed based on either:
	Non-integrated (or comp-to-comp) formula, or
	Integrated (social security wage base) formula

Plans may also provide that employees must be employed on the last day of the plan year and must work up to 1000 hours to receive a contribution.

Maximum Annual Contributions

Employer Contributions are limited to:
	25% of eligible participant wages

Employee Annual Additions are limited to:
	Lesser of $49,000 or 100% of compensation (2009)

Are Catch-up Contributions Allowed?

Yes, limited to:
	$5,500 (2008)
	$5,500 (2009)

Contribution Deadlines

Employee Deferral Contributions
	Must be deposited by the 15th business day following the month of deferral, or sooner if administratively feasible - the DOL has indicated that contributions made within 7 days will not be considered late

Employer Contributions
	Must be made by the employer’s tax filing deadline, including extensions

Vesting Schedule

Employee Deferral Contributions are always 100% vested

Employer Contributions may be subject to a vesting schedule. Examples of possible vesting schedules include a three (3) year cliff (0,0,100) or a six (6) year graded (0,20,40,60,80,100)

Withdrawals and Loans

Withdrawals permitted only upon termination, death, disability or retirement.

Plans may elect to allow hardship or in-service withdrawals

Plans may elect to allow plan loans and must specify the parameters under which a participant can take a loan.

Administration & Reporting Requirements

Top-heavy and non-discrimination testing required

Form 5500 filing required

Fidelity Bond required