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401(k) Retirement Plans
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We have Plans for You! SM
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401(k) plans
are one of the fastest growing plan designs available today. The
401(k) design is popular among employers and employees. Primarily
because the employer is not required to fund the plan and the
employees can continue to deposit on a pre-tax basis a portion of
their salary, in some cases up to 20%, regardless of what the
employer contributes. It's the only design that offers an
employer/employee partnership while saving for retirement in a
pre-tax environment.
- 401(k) is a type of
profit sharing plan under which participants can voluntarily
contribute a portion of their salary on a pretax basis.
- Salary deferrals are
not included in employees' income for federal or state (except
PA and AL) tax purposes. However, they are included for Social
Security (FICA) and unemployment tax (FUTA) purposes.
- The employer may
choose to make additional contributions, although there is no
requirement to do so. The most common types are employer
matching contributions and traditional profit sharing
contributions.
- The maximum
tax-deductible contribution which can be made is 15% of the
compensation of all the employees eligible to participate in
the plan.
- Combined employer and
employee amounts for any one participant cannot be more than
25% of reduced pay up to $30,000.
- Employee salary
deferrals are limited to $10,000 in 1998. The maximum deferral
amount is adjusted annually.
- 401(k) plans are a
good choice for the employer who wants a low-cost employee
fringe benefit. The plan is funded partially or totally with
employee pretax contributions. Thus, a relatively small
capital outlay can provide a highly visible employee benefit
program. It can be an excellent way to give employees the
opportunity to replace lost IRA deductions.
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Universal Health Systems, Inc.
