Thoughtful 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.
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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.
Special Note: For 2020 the CARES Act temporarily suspended the RMD requirements from IRAs and qualified retirement plans provided the employer sponsoring the plan adopts the CARES Act provisions. Check with the sponsor of your retirement plan to confirm if you must take an RMD for 2020.
a. $19,500 for 2021;
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 $6,500 catch up contribution.