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The
401(k) Plan is generally a profit sharing plan that allows employees to
defer a portion of their salary on a pretax basis. These deferrals are
usually made through payroll deductions. The maximum amount that an employee
can defer into a 401(k) Plan in 2011 is $16,500. This limit is adjusted
each year to reflect changes in the cost-of-living.
Participants age 50 and older can make "catch up" contributions
to a 401(k) plan. The maximum "catch up" contribution for 2011
is $5,500.
Employer Advantages
- No
employer contributions are required.
- The employer can make discretionary matching and/or profit sharing contributions
- Is mostly
funded from dollars paid as salary
- Lets
you deduct employer contributions from taxes as a business expense
- Helps
recruit and retain quality employees
- Helps
employees build retirement security
- Safe
Harbor feature available
- Class
Allocation feature available
- Simplified owner only features available
Employee Advantages
- Save
through easy payroll deduction
- Choose
the amount they want to save
- Change
the amount saved to meet current needs
- Reduce
their taxable income
- Defer
taxes on the amount saved and its earnings until the employee receives
benefits from the plan
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PenSys 401(k) Plan