Employer Sponsored Retirement Plans
Employer-Sponsored Retirement Plans
Helping your employees save for retirement can be a valuable benefit and employee retention strategy. In addition, employer-sponsored retirement plans offer tax advantages to both employers and employees. There are a variety of employer-sponsored retirement plans to choose from.- Simplified Employee Pension (SEP) Plan – Designed for smaller companies with few employees, this plan allows only the employer to contribute. Company contributions may not exceed the lesser of 25% of the employee's annual compensation, or $49,000 for 2011 and $50,000 for 2012.
- Savings Incentive Match Plan for Employees (SIMPLE) IRA Plan – Intended for companies with 100 or fewer employees. Employees may contribute up to $11,500 of pre-tax salary for 2011 and 2012. Employers must either match employee salary deferrals (up to 3% of pay) or contribute 2% ($245,000 salary limit for 2011, $250,000 for 2012) on behalf of all eligible employees. If the participant is age 50 or older, an additional $2,500 of pre-tax salary may be contributed for 2011 and 2012.
- 401(k) / Roth 401(k) plan – For mid-to large-sized companies, this plan type allows both employers and employees to contribute. The annual maximum employee contribution is $16,500 for 2011 and $17,000 for 2012. If the participant is age 50 or older, an additional $5,500 contribution is allowed for 2011 and 2012. Employer contributions cannot exceed 25% of all eligible employees' annual compensation. The total of all contributions for an employee cannot exceed the lesser of 100% of his or her annual compensation, or $49,000 for 2011 and $50,000 for 2012 ($54,500 for 2011 and $55,500 for 2012 for age 50 or older).
- 403(b) plan – Helps employees of school systems, congregations, and nonprofit organizations save for retirement. The annual maximum employee contribution is $16,500 for 2011 and $17,000 for 2012. If the participant is age 50 or older, an additional $5,500 contribution is allowed for 2011 and 2012. The total employee contribution and any employer contribution cannot exceed the lesser of 100% of his or her annual compensation, or $49,000 for 2011 and $50,000 for 2012 ($54,500 for 2011 and $55,500 for 2012 for age 50 or older).
- Profit-sharing plan – Intended for mid- to large-sized companies. Only the employer can make contributions, which cannot exceed 25% of all eligible employees' annual compensation. The total of all contributions for a participant cannot exceed the lesser of 100% of his or her annual compensation, or $49,000 for 2011 and $50,000 for 2012. If employee contributions are requested, provisions are made to the plan and it becomes a 401(k).
- Defined-benefit pension plan – Generally intended for large-sized companies and funded by the employer. Each year, an enrolled actuary determines how much the employer must contribute to adequately fund the promised benefits. The annual pension provided to any participant may not exceed the lesser of 100% of average annual compensation for the highest three consecutive years, or $195,000 for 2011 and $200,000 for 2012.
Contact a Thrivent Financial representative today to learn more about how you, your business and your employees could benefit from an employer-sponsored retirement plan.
Thrivent Financial for Lutherans, its affiliates and financial representatives do not provide tax advice.
Thrivent Financial for Lutherans and its respective associates and employees cannot provide legal, accounting, or tax advice or services. Work with your Thrivent Financial representative in collaboration with your attorney and/or tax professional for complete details.
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