401(k) plans are the most popular plans in the US, making up roughly 80% of all defined contribution plans. 401(k) plans are a tax-advantaged retirement plan that let you defer a portion of your income to grow in the markets with less tax burdens compared to opening a brokerage account directly. We can offer both pretax and Roth features in our 401(k) plans. They are available to any for-profit business of any size, including (but not limited to) sole proprietors, LLCs, corporations, and partnerships.
401(k) plans generally have fairly high contributions limits and combined with a profit-sharing feature can allow owners and officers to put away large amounts of income for retirement. They provide high amounts of flexibility to both business owners and employees and are one of the most popular plan designs for a reason.
A 403(b) plan is functionally very similar to a 401(k) plan allowing employees and owners to defer portions of their salary, however 403(b)s are exclusively for public schools, nonprofit organizations (501(c)(3)), religious institutions, and certain government entities. They follow all the same contribution limits and guidelines as 401(k) plans, however they can occasionally be exempt from certain administrative requirements.
These plans, like 401(k) plans, have grown to be very popular in the tax-exempt business world, and are quickly replacing the more traditional defined benefit plans historically associated with nonprofits and school systems.
A 457 plan is a salary deferral plan exclusively available to governmental agencies, including state and local governments. They also include certain exemptions and minor differences from 403(b) plans. Feel free to contact us to decide whether a 457 plan or 403(b) plan is right for you.
A profit-sharing plan is a discretionary, employer-funded plan. An employer can decide each year how much it would like to contribute. Although contributions historically are made as a percentage of compensation, this can be skewed using "new comparability" rules to allow high amounts of flexibility and often enable employers to make higher contributions to owners and more senior employees.
Although profit sharing plans can be standalone, they are often paired with a 401(k) feature, being utilized to supplement the plan and allow owners to make contributions above the personal deferral limit of a 401(k). Although often classified as two separate plans for certain compliance reasons, Journey specializes in combined 401(k) profit sharing plans, meaning you'll operate under a single 401(k) plan document with a profit-sharing feature and only pay one plan fee for a combined 401(k) profit sharing plan. This combination is by far the most popular among business owners of all sizes as it allows the highest degree of flexibility for you as an employer.