Retirement Plan Comparison Chart

The following chart is a brief summary of the different types of Retirement Plans available.

PLAN	SEP-IRA	SIMPLE IRA	Traditional 401K	Safe Harbor	Profit Sharing	New Compatibility
Business Size	Any size business	1-100 employees	Any size business	Any size business	Any size business	Any size business
Eligibility	Employees with 3 years of service in the past 5 years (including part-time), age 21 and earning more than $450.	Employees earning $5,000 or more in any past 2 years and current year.	Generally, age 21 and over with 1 year of service (1,000 hours).	Generally, age 21 and over with 1 year of service (1,000 hours).	Generally, age 21 and over with 1 year of service (1,000 hours).	Generally, age 21 and over with 1 year of service (1,000 hours).
Employee Contributions	None (permitted in SARSEPs established prior to 1997 - SARSEPs have been replaced by SIMPLE IRAs).	The lesser of 100% of compensation or: 2002 - $7,000 2003 - $8,000 2004 - $9,000 2005 - $10,000	The lesser of 100% of compensation or: 2002 - $11,000 2003 - $12,000 2004 - $13,000 2005 - $14,000 2006 - $15,000	The lesser of 100% of compensation or: 2002 - $11,000 2003 - $12,000 2004 - $13,000 2005 - $14,000 2006 - $15,000	None	None
Employer Contributions	Employer determines whether and how much to contribute annually, up to the lesser of 25% of compensation or $4,000.²	Either: 1. Match of 100% of employee contributions up to 3% of compensation (can be reduced 2 out of 5 years to 1-3%). 2. Non-elective contribution of 2% of compensation to all eligible employees.	Optional matching contributions or end of year discretionary contribution up to the lesser of 100% of compensation or $40,000 (less elective deferrals). Employer deduction for the discretionary contribution is limited to 25% of aggregate compensation.	Required Safe Harbor contribution of either: 1. Match of 100% of the first 3% employee contributions plus 50% of the next 2%. 2. Non-elective contribution of 3% of compensation to all eligible employees.	Discretionary contributions up to the lesser of 100% of compensation or $40,000 (less elective deferrals). Employer may deduct up to 25% of aggregate compensation.	Generally, the required minimum contribution to the non-highly compensated employees is the lesser of either: 1. 1/3 of the average contributions to the highly compensated employees. 2. 5% Maximum contribution up to the lesser of 100% of compensation or $40,000. Employer may deduct up to 25% of aggregate compensation.
Employer Contributions	100% vested immediately.	100% vested immediately.	Matching contributions graded vesting up to 6 years or cliff vesting up to 3 years. All other employer contributions: graded vesting up to 7 years or cliff vesting up to 5 years.³	Safe Harbor contribution: 100% vested immediately. Additional matching contributions: graded vesting up to 3 years. All other employer contributions: graded vesting up to 7 years or cliff vesting up to 5 years.	Graded vesting up to 7 years or cliff vesting up to 5 years.³	Graded vesting up to 7 years or cliff vesting up to 5 years.³
Discrimination Testing	None	None	May be required^4,5	None	May be required⁵	May be required⁵
Form 5500	None	None	Required	Required	Required	Required
Employee Loans Permitted	No	No	At employer's discretion	At employer's discretion	At employer's discretion	At employer's discretion
Best for:	Self-employed and small, closely held businesses looking for a simple plan to administer with flexible contribution options.	Businesses seeking an easy to administer plan that permits salary deferrals.	Businesses seeking plan design flexibility who want to have all or a portion of the cost of retirement contributions paid by employees.	Businesses who are already making matching contributions to their existing 401(k) or the top heavy minimum contribution. Companies with highly compensated employees who want to make the greatest employee contribution.	Businesses seeking flexible annual contributions and profit-sharing incentives to employees.	Businesses seeking to allocate plan contributions according to employee classification groups. Will provide favorable results when the average age of those in the favored group is at least 5 years greater than the average age of those in the non-favored group.

¹Groups of the employees may be excluded from eligibility based on classification other than age or service.

²May increase up to $40,000 as the IRS limit on maximum compensation increases.

³Accelerated vesting requirements may apply if the plan is top heavy.

⁴Highly compensated employees in a Traditional 401(k) plan may be limited to a reduced employee contribution amount subject to the results of discrimination testing performed each year.

⁵If the plan is top heavy, special contributions and accelerated vesting requirements may apply.

This chart is not intended to give tax advice. Please consult your tax adviser before investing.