One of the simplified features is that SIMPLE 401(k) plans do not requirenondiscriminationand top-heavy testing to ensure that the plan operates in compliance with IRS rules. Such testing must generally be done by professionals and can be quite costly. Although withdrawals befor...
Immediate 100% vesting for employees No discrimination testing for employer Loans and hardship withdrawals allowed Cons Mandatory contributions (for employer) No other plans allowed Smaller employee contributions than regular 401(k) Lower employee contribution limits Who Is Eligible for a SIMPLE 401(k)...
testing the plan each year to gauge its compliance with all IRS non-discrimination requirements as well as plan and participant contribution limits; allocation of employer contributions and forfeitures; calculating participant vested percentages; and, preparing annual returns and reports required by IRS...
This will allow higher earners to receive a greater company contribution and can make it easier for many companies to pass their annual non-discrimination tests (particularly the Actual Deferral Percentage test). Highly Compensated & Key Employees Compensation thresholds for Key Employees and Highly ...