401(k)  Plans*
 
Employees who want to save for retirement through their employer's tax-deferred retirement plan.  Employees' pretax dollars are invested in plan investment options. Employee deferrals pursuant to a salary reduction agreement with the employer are automatically deducted from eligible compensation. Some or all employee contributions may be matched by employer.
 
Traditional 401(k)
Safe Harbor 401(k)
SIMPLE 401(k)
Available
No limit on number of employees. Other plans are allowed.
No limit on number of employees. Other plans are allowed.
100 or fewer employees earning $5,000 or more in prior year. Must be employer’s only plan.
Maximum employee elective contribution
$19,000
$19,000
$19,000
Maximum employee catch-up contribution 50 years or older
$6,000
$6,000
$6,000
Employer contributions
Optional
Required
Required
Vesting
Vesting schedule permitted for employer contributions.
Safe Harbor employer contributions must be 100% vested. Additional employer contributions may be subject to a vesting schedule.
Employer contributions must be 100% vested.
Loans
Permitted
Permitted
Permitted
Average Deferral Percentage (ADP) test
Required
Not Required
Not Required
Top-Heavy Requirements
Top-heavy plans must provide a minimum 3% employer contribution for all eligible non-key employees.
Not Required
Not Required
Plan administration
Full administration required.
Simplified.
Simplified; least expensive.
Roth feature option
Available
Not Available
Available

  *Source: 2007 Tax Facts


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