Types of Plans
This well-known, specialized type of Profit Sharing plan allows your
employees to contribute on a pre-tax (or after-tax “Roth”) basis. Employers may
or may not match a percentage of the employee contribution. Employer
Discretionary Profit Sharing contributions may also be made.
This type of plan allows for the most flexible, discretionary contribution
each year. A “New Comparability” Profit Sharing plan may allow contributions to
be heavily weighted toward older, higher paid owners/ employees.
Employee Stock Ownership Plans
(ESOPs) can be a very powerful planning tool for business owners as well as
an important employee motivational benefit. ESOPs offer unique tax planning
These traditional plans are designed to provide a specific benefit at
retirement. The amount of funding needed to produce the benefit is actuarially
determined each year. Defined Benefit Plans can typically allow the largest
contribution/ benefits of any Qualified Plan Design.
A cash balance plan is a Defined Benefit plan, funded solely by the
Employer. The plan maintains hypothetical individual participant accounts for
Money Purchase/Target Benefit
These plans are designed to provide a specific contribution for each eligible
employee each year, at a fixed contribution formula.
Tax Sheltered Annuity (403(b)
Certain tax-exempt organizations may sponsor these programs which permit
employees to contribute on a pre-tax (or after-tax “Roth”) basis; the employer
may provide matching and discretionary contributions as well.
A deferred compensation arrangement for governmental and other tax-exempt
entities (457(b)). A select group of management or highly compensated employees
may defer compensation under a 457(f) program.
Non-Qualified Executive Deferred Compensation
This kind of plan will permit the employer to provide supplemental retirement
benefits to a select group of management or highly compensated employees. These
arrangements may also permit deferral of compensation by the executive on an
Called a “welfare benefit” plan, this plan allows employees to choose between
cash compensation and other types of fringe benefits. Employees may pay
insurance premiums, out-of-pocket medical expenses and dependent care expenses
with pre-tax dollars.
HRAs and HSAs
Health Reimbursement Arrangement (HRA): Tax-Free employer
funded account-based benefit to help employees pay for some qualified
out-of-pocket health care expenses defined by the plan; may be paired with any
health insurance plan; works best with a High Deductible Health Plan.
Health Savings Account (HSA): HSAs are individual savings
accounts that can be used to pay for qualified health care expenses with
tax-free dollars; may be funded by the employer, the employee or both; must be
paired with an HSA eligible High Deductible Health Plan.