| |
SEP-IRA |
Self-Employed 401(k) |
SIMPLE-IRA |
401(k) |
| Who
can benefit |
Self-employed small biz
owner or Sch C filer (including those with employees) |
Self-employed small biz owner or Sch C filer with no employees
other than a spouse |
Small
business with less than 100 employees |
Any
business which has more than 20 or 30 employees |
|
Available to which incorporation types |
Sole proprietor
Partnerships
LLC
S-Corp
C-Corp |
Sole
proprietor
Partnerships
LLC
S-Corp
C-Corp |
Sole
proprietor
Partnerships
LLC
S-Corp
C-Corp |
Partnerships
LLC
S-Corp
C-Corp |
|
Advantages |
Easy to setup
Flexible funding
Full range of investment choices |
Potentially
the highest contribution levels possible. Full range of
possible investments. |
Electronic
funding with various levels of contributions for each employee.
Full range of possible investments. |
Investments
in widest possible range of mutual funds |
| How
to Contribute |
Funded by employer only |
Employer
deferrals and employee contributions |
Employer
deferrals and employee contributions |
Employer
deferrals and employee contributions |
| 2007
Employee Contribution Limits |
Not Applicable |
$15k salary
deferral ($20,500 for those over 50 years of age) |
$10,500
salary deferral ($13k for those over 50 years of age) |
$15,500
salary deferral ($20,500 for those over 50 years of age) |
| 2007
Employer Contribution Limits |
25% of compensation
with a max of $45k |
25% of
compensation with a max of $45k. Total employer + employee
contrib max at $45k (or $50k if over 50) |
Match employee contributions up to 3% of compensation.
Match can be reduced to 1% in any two out of five years. Or
contribute 2% of each employee's compensation, up to $4,500. |
Match or
profit-sharing up to 25% of compensation with a max of $45k (or
$50k if over 50) |
|
Administration |
No admin filings |
Annual
filing of tax form 5500 after assets exceed $100k |
No employer
filings |
Employer
must file form 5500 annually and do testing to be sure plan
doesn't favor highly compensated employees |
|
Withdrawals |
anytime but a 10%
penalty if under 59 1/2 |
requires a
"trigger" event such as plan termination, disability, or age 59
1/2 |
anytime but
a 10% penalty if under 59 1/2 and a 25% penalty if
taken out within the first two years |
requires a
"trigger" event such as plan termination, disability, or age 59
1/2 Loans available
Hardship w/draw possible |
|
Deadlines |
Must establish the plan
by tax deadline (usually Apr 15 but deadlines can be extended) |
Must
establish by Dec 31 or fiscal year end |
Must
establish by Oct 1 |
Based on
plan documents |
