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401(k) Plans
Profit-sharing plans for business
A 401(k) Plan is a business profit-sharing plan that lets employees defer pre-tax salary for retirement savings. Any sole proprietorship, partnership or corporation can set up a 401(k) Plan to reduce the tax burden and help attract and retain employees.
Four types of 401(k) contributions can be made — employer profit-sharing contributions, employee pre-tax contributions, matching contributions by the employer and after-tax employee contributions.
An individual's total contribution cannot exceed 25 percent of his or her annual compensation; total plan contributions cannot exceed 15 percent of all eligible employees' compensation. Employees are immediately vested in salary deferrals and qualifying matching and non-elective contributions.
Business owners must file an IRS Form 5500 to set up a 401(k) Plan.
For more information, contact an Extraco Relationship Manager by e-mail, or call 866-EXTRACO toll-free.
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