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Retirement Planning

Overview

IRA Based Defined Contribution Based Defined Benefit Plan
SEP IRA SIMPLE IRA Individual (Solo) 401(k) 401(k) Plan
Employer Eligibility

Self-employed individual or small business owner, including those with employees

Available to sole proprietors, partnerships, C corporations, S corporations

Businesses with 100 or fewer employees and self-employed individuals

Available to sole proprietors, partnerships, C corporations, S corporations

Self-employed individual or business owner with no employees other than a spouse

Available to sole proprietors, partnerships, C corporations, S corporations

Any employer with one or more employees. Any employer with one or more employees.
Key benefits

Easy to set up and maintain

Flexible annual funding requirements

Salary deferral plan with less administration A 401(k) with potentially higher contribution limits than SEP IRA Permits high level of salary deferrals by employees. Provides a fixed, pre-established benefit for employees.
2020 employer contribution limits Up to 25% of compensation up to a maximum of $57,000 Either match employee contributions up to 3% of compensation; can be reduced to 1% in any two out of five years or contribute 2% of each employee's compensation

Employers may contribute up to 25% of compensation up to a maximum of $57,000.

Total employer/employee contributions cannot exceed $57,000.

25% of total compensation of all eligible employees Annually determined contribution.
Who can contribute? Employer contributions only Funded by employee deferrals and employer contributions Funded by employee deferrals and employer contributions Funded by employee deferrals and employer contributions Primarily funded by employer.
2020 employee contribution limits Not applicable Up to $13,500 in salary deferrals; $16,500 if age 50 or older Up to $19,500 in salary deferrals; $26,000 if age 50 or older $19,500 in 2020. Participants age 50 or over can make additional contributions up to $6,500 in 2020. Primarily funded by employer.
Plan setup deadlines Establish by employer's tax filing deadline, plus extensions, usually April 15. Establish by October 1. Establish by December 31 (or fiscal year-end). Establish by December 31 (or fiscal year-end). Establish by December 31 (or fiscal year-end).