401(k) and Profit Sharing Plans
Point your employees toward a more secure future
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Learn MoreThoughtful plan design assists employers in meeting their goals
Some of the most important benefits your company can offer are those that promote saving for retirement as well as reward employees who make key contributions to your organization. A retirement plan with 401(k), employer match and profit sharing features does just that. At First American Bank, we will serve as the third-party administrator for your company's plans, providing the support and oversight you desire.
- Create plans in which employees contribute to their retirement account on a traditional pre-tax basis and/or on a Roth after-tax basis.
- In-depth discussions with your company about plan design and goals
- Choose the best record-keeping platform for your needs
- Timely and attentive service with competitive costs
- Several profit sharing allocation formulas will be considered when designing your plan.
- One popular option is a cross-tested profit-sharing plan, under which you allocate different contribution rates to your employees based on criteria you select.
- For example, you may want larger contributions to go to the business owners or top performers. Alternatively, you may want to consider criteria such as tenure with the company or job classification.
- Under the cross tested method, we project the value of current year contributions into a benefit at retirement age. As such, cross testing takes into account the time value of money when determining the value of benefits.
Disclosures
Not FDIC Insured | Not Bank Guaranteed | May Lose Value | Not Guaranteed by Any Government Agency | Not a Bank Deposit
Prior to 2020, you were required to start taking Required Minimum Distributions (RMDs) by April 1 of the year following the year in which you attained age 70 ½. That rule still applies if you attained age 70½ by the end of 2019. Once you are required to begin taking RMDs, you must continue. For 2020, the SECURE Act increased the age to begin RMDs to age 72 and then subsequently with the passing of SECURE Act 2.0 beginning in 2023, the age has been raised again. The schedule below outlines at what age you must begin taking RMDs.
Date of birth before 7/1/1949, RMD starts at age 70 ½. Date of birth 7/1/1949 to 12/31/1950, RMD starts at age 72. Date of birth 1/1/1951 to 12/31/1959, RMD starts at age 73. After 12/31/1958, RMD starts at age 75.
The same April 1 deadline applies. Thereafter, you must take RMDs annually on or before December 31. Note, two required distributions will be issued your first year if you wait until the period January 1 to April 1 to begin your RMDs. You may avoid two taxable distributions in the first year by taking your first withdrawal on or before December 31 of the year in which you attain the applicable age as shown above.
However, if you are still working, you are not required to begin RMDs from your employer sponsored plan until April 1 of the year following the year in which you terminate employment. This exception does not apply if you own more than 5% of the employer, nor does it apply to IRAs.
a. $23,000 for 2024;
b. the maximum deferral amount allowed under the terms of the plan; or
c. the amount that allows the plan to meet the required nondiscrimination tests.
In addition, if you attain age 50 or older by December 31, you may defer an additional $7,500 catch up contribution.
