From pensions to IRAs, there are many types of retirement plansThough 401(k) plans are a common employee benefit, some businesses and organizations may want to consider other retirement plan options. At First American Bank, we can guide you to the alternatives that fit your objectives, ranging from employer-funded pensions to plans that provide enhanced retirement benefits for managers and other top-level employees.
- 403(b) Plan: Offered by certain 501(c)(3) tax-exempt organizations and public schools. Participants save for retirement by contributing a portion of their pay; employers also can contribute to participants’ accounts. This is also referred to as a tax-sheltered annuity (TSA).
- Money purchase pension plan: A plan funded by employers, who must make a contribution each year for the plan participants. Plan documents must state the required contribution percentage and how the amount is to be allocated among participants.
- Nonqualified deferred compensation plan: A plan maintained for a select group of management and highly compensated employees. It allows the employer to provide benefits to these employees over the limits imposed under qualified plans.
- SEP-IRA: A Simplified Employee Pension Plan allows the employer to contribute to IRAs that are established for employees.
- SIMPLE-IRA: A SIMPLE IRA (Savings Incentive Match Plan for Employees) can be established by an employer with 100 or fewer employees. The employer must contribute the amount required by the plan document and employees are also permitted to defer part of their pay under this type of plan.
- Cafeteria plan: These plans provide participants with an opportunity to receive certain pre-tax benefits. These include health insurance, dental insurance, vision insurance, flexible spending accounts for dependent care and medical care, and health savings accounts.
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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.
a. $22,500 for 2023;
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.