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Generally, salary deferrals cannot be withdrawn until separation of service, death, disability, or retirement.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.