401k plan

Every company, whether a C Corporation may establish, S corporation, partnership, sole proprietorship, self-employed plan. The company sets the conditions within certain guidelines, which will be established at the time the plan. Employers, persons with less than 1 year service, union members, non-US citizens, part-timers to limit, etc., from being eligible for the plan. Contributions to plan can come from voluntary employee salary reduction, employer or both. Each employee can defer in 2010 up to $ 16,500 or 100% of compensation, less. Participants aged 50 years can make additional "catch-up" contributions of $ 5,500 in 2010. Employees are immediately vested 100% with their own salary reduction tax deferred
contributions.
Employee may be subject to withdrawals before age 59 2.1 10% penalty. Employees who withdraw at any time during the calendar year in which they turn 55 or later, are not subject to the 10% penalty. Employers can use a vesting schedule, within certain guidelines, which makes the Company's contributions to 401k. Employers are not required nor obligated to make any contribution to the 401k, although some employers pay contributions if plan may have considered top-heavy. Turnkey and Internet-based plans are available. offer excellent selection of investment options for the plan sponsor within the plan. The investment choices in most plans range from 8 to 20 options.The average plan has about 15 401k plans may permit "self-directed investment accounts" and company stock purchase within the plan. Employee contributions to the plan are not subject to federal income taxes until a distribution made under the plan. Any investment gains and income to enjoy tax deferral until distribution. This type of plan can permit loans and hardship withdrawals. Participants can start, stop contribution during course of the year, as determined by the Company. The employer can receive certain tax benefits for contributions. The plans are subject to severe discrimination testing and top. Typically, the amount of the owners and highly compensated individuals can contribute to a 401k is a function of the contributions of other employers. 401k plans may be subject to IRS 5500 filings.