401(k) Plans

401(k) Plans

Employer Characteristics	All taxable business & tax-exempt organizations
Who Must Be Covered	Any employee with more than 1,000 hours of service within one year & who is age 21 or older; can exclude certain employees.
Maximum Allocation (2011)	Maximum eligible pay per employee is $16,500 plus employer can match up to 3% of eligible pay.
Maximum Annual Employee Deferral (2011)	Up to $5,500, catch-up contribution if 50 years of age or older
Required Employer Contributions	Discretionary, unless plan is top-heavy (A plan is top-heavy if on the determination date, the total value of the accounts of all key employees is greater than 60% of the total value of the accounts of all employees).
Vesting	Vesting schedules available
Top-Heavy Testing Required	Yes
Who Controls Distributions	Employer through the plan terms
Advantage of this type of plan	Employee deferral of current taxes available Flexible contributions More flexibility with contribution amounts due to increase in deferral limit