SIMPLE vs. Sec. 401(k) comparison.
II. Major Reasons to Choose a SIMPLE Sec. 401(k) 1. Avoid top-heavy rules and discrimination testing for salary deferrals. 2. Limit employees' in-service withdrawal rights. 3. Limit employee investment options to one financial institution without triggering "designated financial institution" issues. 4. Avoid higher early withdrawal penalty and rollover prohibition during employee's first two years of participation. 5. Provide plan loans. 6. Provide creditor protection for plan assets. 7. Provide employer oversight for plan distributions.
III. Major Reasons to Choose a Traditional Sec. 401(k) Plan 1. Avoid mandatory employer contributions. 2. Allow or provide higher employee. contribution levels ($9,500 vs. $6,000). 3. Allow or provide higher (or lower) employer contribution levels. 4. Apply vesting schedule to employer contributions. 5. Noncalendar Plan Years allowed. 6. Plan can be customized to achieve employer objectives. See the chart on pages 486-487 for a comparison of a SIMPLE with a Sec. 401(k) plan. From John M. Peterson, CPA, Goodman & Company, L.L.P., Norfolk VA.
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|Title Annotation:||Savings Investment Match Plan for Employees|
|Author:||Peterson, John M.|
|Publication:||The Tax Adviser|
|Date:||Aug 1, 1997|
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