Cross-Tested PS

Who can establish this Plan?

Any employer with one or more employees

When must the Plan be established?

By the end of the fiscal year-end (12/31 for calendar year)

Are employee contributions mandatory?

N/A

Are employer contributions mandatory?

No. The contribution is discretionary.

What are the employer contribution limits?

25% of participating compensation with the allocations limited to 100% of compensation or $56,000 per participant in 2019.

What is the funding responsibility?

Annual employer contribution is discretionary.

When must contributions be made?

Employer contributions must be deposited by tax-filing date plus extensions

What are the eligibility requirements?

The maximum allowable eligibility requirements that can be imposed are 21 years of age and 1,000 hours of service in 2 preceding years. The employer has the option of reducing these requirements.

What are the vesting requirements?

Employee salary deferrals are 100% vested. Employer contributions may vest over time, typically a graded schedule with full vesting after 6 years.

Is the Plan subject to non-discrimination testing?

Yes. This is a complex plan design and requires discrimination testing under IRC 401(a)(4).

Is the Plan subject to top heavy minimums?

Yes. If 60% or more of the plan assets are allocated to Key employees, up to a 3% employer contribution is required.

When is an employee eligible to withdraw from the Plan?

Generally, salary deferrals cannot be withdrawn until separation of service, death, disability, or retirement. A plan may allow for hardship distributions.

Northeast Planning Services, LLC

210 Bear Hill Road
Waltham, MA 02451

Phone: (781) 890-5500
Fax: (781) 890-5505

Email: info@neplanning.com