Both SIMPLE plans and 401(k) plans allow for employee deferrals but the maximum contributions are higher in a 401(k) plan.
Employer contributions are discretionary unless it is a “safe harbor” plan. A safe harbor plan uses a formula to determine what an employer needs to contribute to meet nondiscrimination requirements. A safe harbor provision allows the owners and highly-compensated employees to make maximum deferrals to the plan regardless of the contribution rates of their employees. 401(k) plans require recordkeeping and annual filings.
Selecting the right plan for your company requires knowledge and experience. The professionals at Northern Financial Management have what it takes to design and implement the right plan. We would welcome the opportunity to discuss your current strategy.
For a complimentary copy of our “Commitment to Retirement Plan Services” a comprehensive outline of the services we offer to our retirement plans sponsors and their employees, please contact our office.