- SECURE EPLAN SERVICES 401K PLUS
- SECURE EPLAN SERVICES 401K FREE
This Alert discusses the new 401(k) plan eligibility requirements for long-term, part-time employees effective for plan years beginning after December 31, 2020. We have previously described key SECURE Act provisions. On December 20, 2019, the SECURE Act was signed into law, generally effective as of January 1, 2020. It also does not require matching requirements by employers for any level of employee participant.
The addition of part-time eligibility does not nullify the 1,000 hours per year rule. Under the new rules, long-term, part-time employees who work at least 500 hours in three consecutive years (and have attained age 21) must be allowed to participate in 401(k) plans. Previously, part-time employees who worked fewer than 1,000 hours per year were excluded from such plans. The new Setting Every Community Up for Retirement Enhancement (SECURE) Act, effective this year, broadens eligibility requirements for 401(k) plans. SECURE EPLAN SERVICES 401K PLUS
Employer contribution may be made through the business’ tax filing due date plus extensions. 
Salary deferral portion of the contribution must be deducted from participants’ paychecks. For taxable years 2020 and beyond, 401(k) plans may be set up by tax filing deadlines plus extensions. ) If you are still employed by the employer sponsoring this plan, RMDs may be delayed until the year of retirement (some exceptions apply.). Up to $5000 for qualified adoption/birth expensesīeginning in tax year 2020, the age to start Required Minimum Distributions (RMDs) has been modified from age 70½ to age 72 (Does not affect participants who turned 70½ on or before. Qualified domestic relations order due to divorce. Substantially equal periodic payments made over life expectancy. Separation of service in the year attaining age 55 or older. Withdrawal Penaltiesġ0% IRS additional tax if withdrawn before age 59½ unless exception applies. Generally a broad array of mutual funds or other investments which may vary based on the retirement platform the plan is on. Roth earnings are tax-free if the withdrawal is considered a qualified distribution. Roth contributions are withdrawn tax-free. Pre-tax contributions and earnings are taxed as ordinary income when withdrawn. SECURE EPLAN SERVICES 401K FREE
Roth 401(k) salary deferrals are not tax deductible but contributions and earnings have the potential to grow tax deferred and may be eligible for income tax free withdrawals if held for five years and withdrawn after age 59½. Your plan may allow you to allocate part or all of your employee deferral to a Roth 401(k).
Employees can make pre-tax contributions. 
Employers can deduct contributions from federal taxable income. The total combination of employer and employee (salary deferral) contributions may not exceed $58,000 ($64,500 if over age 50) for 2021. Employee (Salary Deferral): Up to the lesser of 100% of compensation or for a maximum of $19,500 ($26,000 if over age 50) for 2021. Employer: Profit sharing and match: Up to the lesser of 25% of compensation or $58,000 including employee contributions for 2021. Employee eligibility requirements are set at the time the plan is established. Eligibility to ContributeĬompanies of all sizes and structures can offer this type of retirement plan. When considering a 401(k) plan for employees, keep in mind this flexible plan offering provides the highest level of employee pre-tax or Roth contributions, a wide range of employer contribution options, and an optional loan provision.
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