403(b) vs. 401(k): Differences The main difference is the type of employer who can offer these plans. Unlike 401(k) plans that are offered by for-profit companies, 403(b) plans are only available to employees of tax-exempt, nonprofit institutions like schools, hospitals, and charities.
A health savings account is a tax-exempt trust or custodial account that can be set up to pay for future medical expenses. In order to be eligible to open a HSA, the individual (or trustee) must be covered by a high deductible health plan.
What’s a 401(k)? A 401(k), as well as a 403(b) and 457, is a qualified employer-sponsored retirement plan. If your employer does not offer a 401(k) or other sponsored plan, you should probably just begin saving in a Roth IRA or traditional IRA.
The differences between these 401(k) plans are similar to the differences between regular and Roth IRAs: the timing of taxes. With a Roth 401(k), you pay taxes up front. In other words, you contribute to your retirement account with money from your paycheck after it has already been taxed. Once in the account, your money grows tax-sheltered.
A Roth 401(k) and a Roth IRA sound similar — and they are. Contributions are made after taxes, and earnings can be taken out tax-free at age 59 1/2. But the Roth 401(k) has a few key differences from the Roth IRA.
The safe harbor 401(k) plan is not subject to the complex annual nondiscrimination tests that apply to traditional 401(k) plans. Safe harbor 401(k) plans that do not provide any additional contributions in a year are exempted from the top-heavy rules of section 416 of the Internal Revenue Code.
Retirement Plans; Simplified Employee Pension Plan SEP Simplified ... Also, see Video: Starting a SEP or SIMPLE IRA Plan.
A subset of the 401(k) plan is the SIMPLE 401(k) plan. Just like the SIMPLE IRA plan, this is a plan just for you: the small business owner with 100 or fewer employees. However, just as with the SIMPLE IRA plan, there is a two-year grace period if you exceed 100 employees, to allow for growing businesses.
A SIMPLE plan can apply for both 401(k) and IRA plans. Savings Incentive makes it possible for companies with as few as two employees to establish a 401(k) or IRA. SIMPLE plans are designed for business with 100 employees or fewer who earn $5,000 or more per year.
A one-participant 401(k) plan is sometimes called a: Solo 401(k) Solo-k Uni-k; One-participant k; The one-participant 401(k) plan isn't a new type of 401(k) plan. It's a traditional 401(k) plan covering a business owner with no employees, or that person and his or her spouse. These plans have the same rules and requirements as any other 401(k) plan.
A one-participant 401(k) plan is generally required to file an annual report on Form 5500-SF if it has $250,000 or more in assets at the end of the year. A one-participant plan with fewer assets may be exempt from the annual filing requirement.
A traditional 401(k) is an employer-sponsored plan that gives employees a choice of investment options. Employee contributions to a 401(k) plan and any earnings from the investments are tax-deferred. You pay the taxes on contributions and earnings when the savings are withdrawn.