“Participant” means an employee, associate collaborator, former employee or former associate employee with contributions required or authorized by the terms of the collective agreement or other written contribution contract. A traditional 401 (k) plan offers maximum flexibility for all three types of plans. Employers have the power to make contributions on behalf of all participants, to compare staff deferrals or to make both. These contributions may be subject to a custody plan (which provides that a worker`s right to employer contributions is lost only after a certain period of time). In addition, a traditional 401 (k) allows members to pay pre-tax contributions through wage deductions. Annual tests ensure that the benefits to employees in the series are proportional to the benefits to owners/managers. A participant is also entitled to a credited service for placing in regular sub-accounts and sub-accounts of employer contributions and to avoid a service interruption for each year of service not covered by a single employer if the service is related. The uncovered service is consistent when: (1) the uncovered service precedes or follows the covered service; and (2) between this covered service and the uncovered service, there is no termination, dismissal or retirement. Once you`ve chosen the type of plan for your business, you have flexibility in choosing certain features of the plan – z.B. that can contribute to the plan and how much. Other features in the plan are required by law. For example, the plan document should describe how certain key functions are performed, for example. B the way contributions are deposited in the plan.
“Election contribution” refers to the contribution (including the contribution to care, as defined below) that a participant decides on the basis of a written choice filed with Carpenters Trusts, as authorized under a collective agreement or the terms of a written contribution agreement between an employer and a director, for which the plan is prospectively reduced. The annual contribution limits required to maintain the plan`s qualified status in accordance with the Section 401 code, point a), are described in Article 10.3 and Appendix A – Effective Deferral Percentage Review. A SIMPLE 401 (k) plan has been developed to enable small businesses to provide effective and low-cost retirement benefits to their employees. A SIMPLE 401 (k) plan is not subject to the annual non-discrimination tests applicable to traditional plans. However, like a safe-harbor 401 (k) plan, the employer is required to pay employer dues that are fully equipped. This type of plan of 401 (k) is made available to employers of 100 workers or less who received at least $5,000 in compensation from the employer for the previous calendar year. In addition, workers covered by a SIMPLE 401 (k) plan must not receive contributions or benefit allocations under other employer plans. A safe-harbor 401 (k) plan is similar to a traditional 401 (k) plan, but it must include, among other things, employer contributions that are paid in full at the time of implementation.