FAQs
FAQs
Defined contribution retirement plan qualified under the Internal Revenue Code that allows employees to contribute pre-tax dollars through a salary deferral arrangement.
Each plan is different. You may be able to withdraw contributions due to financial hardship. Some plans also have loan provisions that let you borrow from your account. Please check your Summary Plan Description (SPD) for details of your plan features.
No, Profit Sharing Plans are discretionary. The employer can decide from year to year how much, if any, the contributions will be.
An employee can defer up to $16,500 in 2011, with a catch-up contribution of $5,500 for employees 50 years of age or older.
Under a Profit Sharing Plan, an employer can generally contribute up to 25% of gross pay, per employee, per calendar year.
Under current law, the limit is 100% of pay not to exceed $16,500 per calendar year. This limit is adjusted for inflation and is $17,000 for 2012.
Employers generally must match dollar for dollar up to 3% of pay. However, the match may be reduced to as low as 1% for two of every five years.
Depending on your plans provider, you may make changes to your investments daily. Please see Resources for links to your 401 (k) Plan Provider for details.
Defined contribution retirement plan qualified under the Internal Revenue Code that allows employers to contribute to an employee’s retirement account.
Roth contributions are special after-tax contributions in the 401 (k) plan. For plans that allow Roth contributions, the employee can contribute before tax, Roth after tax or some combination of both. Roth contributions grow tax-deferred and may be tax free when withdrawn at retirement.
For more details on Roth 401 (k)’s please refer to your Plan Provider Link.
Allow participant tax-deferral, flexible employer contributions and minimal paperwork. Businesses with less than 100 employees are eligible.
Catch-up contributions allow employees (you) to “catch-up” for earlier years that you were unable to contribute to 401 (k) plans. You must be 50 years of age or older to be able to make this extra contribution. The catch-up contribution is currently $5,500 and is in addition to the annual limit.
Vesting is “rights to” or the percentage of an employee’s account that has been earned. Vesting schedules are based on a “years of service” formula. Most Profit Sharing Plans have a 6 year vesting schedule as follows:
| 0-2 year | 0% |
| 2 years | 20% |
| 3 years | 40% |
| 4 years | 60% |
| 5 years | 80% |
| 6 years | 100% |