Thanking Your
Industry Expert and
Educational Champion

401(k)
401(k) Plans are defined contribution plans funded primarily by the pre-tax contributions of employees. These plans, named for the section of the Internal Revenue Code that establishes this type of retirement plan, allow employees to save part of their salaries and defer paying taxes until they receive the money. Employers can match the contributions with payments which are also tax deferred.

Automatic Enrollment 401(k)
In Automatic Enrollment 401(k) Plans, employees are enrolled unless they opt out and contributions are deducted from their paychecks. Automatic Enrollment 401(k) Plans can increase plan participation among rank-and-file employees and make it more likely the plan will pass the test ordinarily required under a traditional 401(k) plan. In addition, for certain default investment options provided under the plan, there is relief from liability for the investment results.

Contribution
A contribution is an amount an employer pays into a plan for all those participating in the plan, or an amount an employee pays into a plan for his or her benefit.

Defined Benefit
A Defined Benefit Plan is designed to provide each participant with a fixed income at retirement.

> View Video > Self-Employed 401k > FAQs > Application Request Form

> Return to Retirement Planning and Small Business Funding

Payroll Deduction Individual Retirement Account (IRA)
An employer can set up a payroll deduction IRA program with a bank, insurance company or other financial institution, and then the employees choose whether and how much they want deducted from their paychecks and deposited into the IRA. Employees may also have a choice of investments depending on the IRA provider.

Profit Sharing
Profit Sharing Plans depend on contributions from employers, who agree to share a percentage of profits with employees. These plans may permit contributions from eligible employees as well.

Safe Harbor 401(k)
Safe Harbor 401(k) Plans are similar to traditional 401(k) Plans and are defined contribution plans funded by the pre-tax contributions of employees. In the Safe Harbor 401(k) plans, however, employers are required to make a minimum amount of contributions, but are not required to undergo nondiscrimination tests required under traditional 401(k) tests.

Savings Incentive Match Plans for Employees of Small Employers (SIMPLE)
SIMPLE allows employers with no more than 100 employees to sponsor a retirement plan. Employees who are expected to receive at least $5,000 (and who did so in previous 2 years) are eligible to contribute through a deduction from their paychecks. They can receive an employer matching contribution of up to 3 percent of their pay. Employers may reduce that amount if business conditions vary from year to year. SIMPLE plans require few administrative burdens since the bank or financial institution receiving the funds does most of the paperwork.

> View Video > Self-Employed 401k > FAQs > Application Request Form

> Return to Retirement Planning and Small Business Funding

Self-employed
An individual in business for himself or herself is self-employed. Sole proprietors and partners are self-employed. Self-employment can include part-time work.

Self-Employed 401k
A Self-Employed 401k, also called a Solo 401k, offers unique benefits to those self employed or small business owners that qualify, including greater retirement contributions at identical income levels compared to SEP-IRA, SIMPLE-IRA and Keogh plans; increased tax deductions and lower taxable income; and tax free loans.

Solo 401k
See Self-Employed 401k

Vested
An individual becomes vested in a retirement plan when he or she has the years of service required to receive a pension. Vesting means an individual has the right to collect a pension at a specific age, even if he or she does not stay with the company or organization for their entire working career.

* Glossary provided by elaws Small Business Retirement Savings Advisor

"Investsafe.com specializes in retirement investments and is operated by Lamaute Capital, Inc., an investment brokerage firm registered under the Securities and Exchange Act of 1934 and a member of the NASD (National Association of Securities Dealers) and the SIPC (Securities Investors Protection Corporation) since 1993. Investsafe.com offers access to a team of investment professionals with a wealth of experience in advising individuals, businesses, and non-profits on designing retirement plans, retirement account rollovers, and investments. Products and services include financial planning, mutual fund investments, annuities, retirement plans and retirement investment education."

Newsletter Subscribe