Comparative Features of Alternative Plans
July 13, 2007
|
Feature |
SEP |
Profit-Sharing |
Money Purchase |
Defined Benefit |
|
Eligibility |
|||||
• |
Service |
Employee must work during 3 of the preceding 5 years. |
1 year, or more than 1 year/100% vesting. |
Same |
Same |
| • | Minimum Age |
21 |
21 |
21 |
21 |
| • | Statutory Exclusions |
Union employees & non-resident aliens with no U.S. income. |
Same |
Same |
Same |
| • | Other Nondiscrimination Exclusions |
No |
Yes |
Yes |
Yes |
Employer Contributions |
SEP |
Profit-Sharing |
Money Purchase |
Defined Benefit |
|
| • | How determined |
Discretionary percent of comp. profits formula. |
Same |
Percent of Compensation. |
Mathematically based on projected benefit & age. |
| • | Required |
Generally no. |
Generally no. |
Yes |
Yes |
| • | Maximum |
25% of compensation. |
Same |
25% of compensation. |
No percent limit. |
| Allocation of Employer Contribution |
SEP |
Profit-Sharing |
Money Purchase |
Defined Benefit |
|
| • | Compensation |
Proportionate using compensation as base. |
Same or units or age adjusted compensation. |
Proportionate compensation. |
N/A |
| • | Integrated |
Uniform % of total comp. & excess comp. up to 5.7%. Balance allocated on proportionate comp. |
Same |
Same |
Same |
|
Allocation of Forfeitures |
N/A |
In proportion to compensation. Reduce employer contribution. |
Same |
Same |
|
|
Allocation of Earnings |
N/A |
Based on account balances. |
Same |
N/A |
|
|
Employee Contributions |
SEP |
Profit-Sharing |
Money Purchase |
Defined Benefit |
|
| • | Pre-Tax |
Yes |
Yes |
No |
No |
| • | After-Tax |
No |
Yes |
Yes |
Yes |
Individual Annual imitations |
SEP |
Profit-Sharing |
Money Purchase |
Defined Benefit |
|
| • | Contributions & Forfeitures |
25% of compensation. Up to $45,000. Comp Cap Applies. |
100% / $45,000. |
Same |
N/A |
| • | Benefits |
N/A |
N/A |
N/A |
Lesser of 100% of compensation or $180,000 as indexed. |
|
Antidiscrimination Test Required |
SEP |
Profit-Sharing |
Money Purchase |
Defined Benefit |
|
| • | Employee Contributions |
Yes |
Same |
Same |
Same |
| • | Employer Contributions |
No |
Matching |
No |
No |
| Distributable Events |
SEP |
Profit-Sharing |
Money Purchase |
Defined Benefit |
|
| • | Hardship |
N/A |
Yes |
No |
No |
| • | Age 59½ |
Yes |
Yes |
No |
No |
| • | Age 62 in-service |
N/A |
N/A |
Yes |
Yes |
| • | Termination |
N/A |
Yes |
Yes |
Yes |
| • | Early Retirement |
N/A |
Yes |
Yes |
Yes |
| • | Disability |
N/A |
Yes |
Yes |
Yes |
| • | Normal Retirement |
N/A |
Yes |
Yes |
Yes |
| • | Minimum Required Distribution's Required Beginning Date |
April 1, After Year in which Age 70½ attained. |
5% Owners; April 1 after year in which 70½ attained. |
Same |
Same |
|
Normal Form of Payment |
Lump sum |
Same |
Annuity |
Same as MP |
|
|
Optional Form of Payment |
SEP |
Profit-Sharing |
Money Purchase |
Defined Benefit |
|
| • | Lump Sum |
N/A |
N/A |
Yes |
Yes |
| • | Installments |
Yes |
Yes |
Yes |
Yes |
| • | Annuity |
Yes |
Yes |
N/A |
N/a |
Vesting |
SEP |
Profit-Sharing |
Money Purchase |
Defined Benefit |
|
| • | Top-Heavy Plans And Non-Top-Heavy Plans as of 2007 |
N/A |
2/20 or better |
Same |
Same |
| • | Prior to 2007 for Non-Top-Heavy Plans for ER Contributions, Other Than Matching |
N/A |
3/20 or better 5 year cliff. |
Same |
Same |
Termination Insurance |
No |
No |
No |
Variable |
|
Participant Loans |
No |
Optional |
Same |
Rarely |
|
Statements |
Yes, Annually |
Yes, Annually, if only Employer Investment direction. Quarterly, if any Employee investment direction. |
Same |
Yes, Once every three years, OR Annual notice offering statement each year upon EE's request. |
|