retirement

The skinny on defined contribution plans

Retirement » The Skinny On Defined Contribution Plans

Small-business retirement plans
Considerations for defined contribution plans

Considerations for defined contribution plans

As already noted, much more common these days are defined contribution plans such as 401(k) plans that don't promise a specific pension-type benefit. They have become more popular options for small businesses and their employees.

Some defined contribution plans are subject to annual testing to ensure the amount of contributions made on behalf of the rank-and-file employees is proportional to contributions made on behalf of owners and managers or highly compensated employees. These plans are also required to file an annual report with the federal government showing details about the plan and its operation. But other qualified plans don't require annual testing.

Below are some variables to consider when deciding among various plans.

  • Are employer contributions optional or required?
  • Are employee contributions allowed?
  • Are plan documents required?
  • Are annual returns required?
  • Is annual nondiscrimination testing required?
  • Are catch-up contributions available to age 50-plus participants?
  • Are plan loans allowed?
  • Does the plan sponsor, or employer, have fiduciary responsibility to put the employees' interests above its own?
  • Does the plan require a third-party administrator because of its complexity?

 

advertisement

Show Bankrate's community sharing policy
          Connect with us
MORTGAGE HOME EQUITY AUTO CDs CREDIT CARDS
Product Rate Change Last week
30 year fixed, 0 point 4.28%  0.02 4.26%
15 year fixed, 0 point 3.30% --0.00 3.30%
5/1 ARM 3.35%  0.05 3.30%
 
View Rates in your area Search
Product Rate Change Last week
30K FICO-based HELOC 4.74%  0.01 4.75%
50K FICO-based HELOC 4.53%  0.02 4.51%
100K FICO-based HELOC 4.26%  0.02 4.24%
 
View Rates in your area Search
Product Rate Change Last week
60 month used car loan 2.86% --0.00 2.86%
48 month used car loan 2.79% --0.00 2.79%
60 month new car loan 2.94% --0.00 2.94%
 
View Rates in your area Search
Product Rate Change Last week
1 Year CD 0.89%  0.00 0.89%
2 Year CD 1.02% --0.01 1.01%
5 Year CD 1.59% --0.00 1.59%
 
View Rates in your area Search
Product Rate Change Last week
Balance Transfer Cards 15.67%  0.04 15.71%
Cash Back Cards 16.32%  0.04 16.36%
Low Interest Cards 10.91% --0.00 10.91%
 
Search
advertisement
CD & INVESTING NEWSLETTER

Learn the latest trends that will help grow your portfolio, plus tips on investing strategies. Delivered weekly.

Blog

Jennie Phipps

Should everyone have chance to save?

Social Security won't be enough to support most people in retirement. Should the government require employers to help everyone save?  ... Read more

advertisement
Partner Center
advertisement

Connect with us