Return to Individual Retirement Accounts
Qualified Plans Compared
|
Plan Type |
Defined Benefit |
Defined Contribution |
||
|
Benefit or Feature |
Defined Benefit Plan |
Nontraditional Defined
Contribution Plan |
401 (k) Plan |
SIMPLE IRA |
|
Employer contributions
deductible |
Yes |
Yes |
Yes |
Yes |
|
Employer contributions
currently taxable to participant? |
No |
No |
No |
No |
|
Earnings accumulate
income tax deferred? |
Yes |
Yes |
Yes |
Yes |
|
Contribution Benefit base
is total compensation up to $160,000? |
Yes |
Yes |
Yes |
No |
|
Distributions can be tax
favored using a 5-10 year income averaging? |
Yes |
Yes |
Yes |
Effectively $200,000 |
|
Maximum employer annual
contribution/ Deduction: |
Determined by Actuary |
Money Purchase=25% of
compensation |
15% of compensation less
deferrals |
Match up to 3% of
compensation or 2% of compensation to all eligible employees |
|
Employer Contributions
Required? |
Yes |
Money Purchase=Yes |
No |
Yes at 2% of compensation to
all eligible employees OR 3% of compensation up to
deferral limit |
|
Employer Contributions
Discretionary? |
No |
Profit Sharing=Yes |
Yes |
No |