401k - Employee Plan
The Alexander Shunnarah plan can be designed as a standard 401(k) with many deferral options.
Non-Matching 401(k): With a non-matching scenario, Alexander Shunnarah would not have any costs associated with the plan other than from an administrative standpoint. An employee would defer amounts of their choice, up to the IRS limits ($19,500 and catch up for those over 50 years of age $6,500 for 2021, and $20,500 and catch up for those over 50 years of age $6,500 for 2022) but would receive no match.
Matching 401(k): In a matching scenario, Alexander Shunnarah would contribute a percentage of each employee’s compensation to the employee’s account (called a non-elective contribution), you can match the amount your employees decide to contribute (within the limits of current law) or you can do both. For example, you may decide to add a percentage - say 50 percent - to an employee’s contribution, which results in a 50-cent increase for every dollar the employee sets aside. Using a matching contribution formula will provide additional employer contributions only to employees who make deferrals to the 401(k) plan. If you choose to make non-elective contributions, Alexander Shunnarah makes a contribution for each eligible participant, whether or not the participant decides to make a salary deferral to his or her 401(k) account. Under a traditional 401(k) plan, you have the flexibility of changing the amount of non-elective contributions each year, according to business conditions. A common match by employers is 50% of the employee deferral, up to 6% of annual salary.
Safe Harbor 401(k): Under a safe harbor plan, Alexander Shunnarah can match each eligible employee’s contribution, dollar-for-dollar, up to 3 percent of the employee’s compensation, and 50 cents on the dollar for the employee’s contribution that exceeds 3 percent, but not 5 percent, of the employee’s compensation. Alternatively, you can make a non-elective contribution equal to 3 percent of compensation to each eligible employee’s account. Each year you must make either the matching contributions or the non-elective contributions. The Safe Harbor option is advantageous when an employer has a group of highly compensated individuals who wish to participate.
Vesting: Any non-vested amounts from terminated employees can be returned to a forfeiture account and offset plan expenses.