Services > 401(k) Plans

Traditional 401(k)

A 401(k) plan is a profit sharing plan with a 401(k) attachment. The 401(k) attachment allows participants to defer money out of their paychecks into the plan. The employee’s deferrals are tax deferred allowing for a tax savings in the current year. The deferrals are segregated to a participant’s account and grow tax deferred until retirement.

The employer may also make a contribution to the participant’s account. This contribution can be in the form of a profit sharing contribution or a match. A match is a contribution from the employer equal to a pre defined percentage of the employee deferral.

401(k) have become the most popular form of employer sponsored qualified retirement plan. Two key reasons for this is the ability of an employee to save money themselves and save immediate taxes at the same time as well as an employer’s ability to add contributions for employees on a very flexible basis.

401(k) plans can be combined with any other type of qualified plan to help design the ideal plan for your company.

Safe Harbor 401(k)

A safe harbor 401(k) is the same as a traditional 401(k) with one very important difference. In a safe harbor plan the employer is required to make a minimum profit sharing or matching contribution to the plan in exchange for less testing requirements. These plans allow more contribution options for highly compensated employees in plans that traditionally fail testing requirements.

Individual 401(k)

An individual can take advantage of the 401(k) provisions in a profit sharing plan to allow for additional contributions.


Midwest Pension Actuaries, Inc. | 30680 Twelve Mile Road - Farmington Hills, MI 48334-3803 | 248-539-5000
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