"Compliance Requirements & Limits" Comparison Chart

The chart below illustrates the compliance requirements and limits that apply for the plan types shown.  This chart is intended as a guide only.  Be mindful that many of the requirements and limits interrelate with each other (e.g., individual maximum annual addition/benefit limitations and employer deduction limit).  We suggest that you consult a pension professional before selecting any plan type shown below.  Access to additional information on the specific compliance requirement or limit is underlined in blue

Compliance

Requirements

and Limits

SEP

SIMPLE

 IRA

SIMPLE

401(k)

Qualified Retirement Plan

Profit Sharing (PS)

PS w/401(k)

Defined Benefit

Employer    Conditions

None

100 Employee Limit

100 Employee Limit

None

None

None

Document 

IRS Model Plan

(Form 5305-SEP) or    Plan Document

IRS Model Plan

(Form 5305-SIMPLE) or Plan Document

Qualified Plan

Document

Qualified Plan

Document

Qualified Plan

Document

Qualified Plan

Document

Plan must be established by

Due Date of Employer Tax Return or any extension thereof

Must be established by October 1 of Calendar Plan Year

Must be established by October 1 of Calendar Plan Year

Must be established by end of Plan Year

Must be established by end of Plan Year

Must be established by end of Plan Year

Exclusive Plan

No

Yes

Yes

No

No

No

Employees of Affiliated or Related Employers

Must include

Must include

Must include

May exclude by applying minimum coverage rules 

May exclude by applying minimum coverage rules 

May exclude by applying minimum coverage rules 

Coverage Testing

Not Applicable

Not Applicable

Applicable

Applicable

Applicable

Applicable

Nondiscrimination Tests

Not Applicable

Not Applicable

Not Applicable

Applicable

Applicable

Applicable

Top heavy Rules

Applicable

Not Applicable

Not Applicable

Applicable

Applicable

Applicable

Individual Maximum Annual Addition & Benefit Limitations (IRC §415)

Lesser of 100% of compensation or $44,000

Participant limit plus employer contribution

Lesser of 100% of compensation or $44,000

Lesser of 100% of compensation or $44,000

Lesser of 100% of compensation or $44,000 ("catch-up"  not considered)

Lesser of 100% of highest 3 year comp. average or $175,000

Compensation              Dollar Limit

$220,000

None for Match; $210,000 for non-elective

$220,000

$220,000

$220,000

$220,000

Employer Deduction Limit (IRC §404)

25% of aggregate employee compensation

Participant limit plus 2% ER contribution or 3% ER match

Participant limit plus 2% ER contribution or 3% ER match

25% of aggregate employee comp.

25% of aggregate employee comp.; no offset for "(k)"

Based on plan formula subject to full funding limit

Form 5500 Filing

Not Required

Not Required

Required

Required

Required

Required

Trust Accounting

Not Required

Not Required

Required

Required

Required

Required

Plan Audit

Not Required

Not Required

Not Required

Not Required unless 100 participants or if 95% are “qualifying plan assets”

Not Required unless 100 participants or if 95% are “qualifying plan assets”

Not Required unless 100 participants or if 95% are “qualifying  plan assets”

Fiduciary Responsibility

IRA; therefore, not applicable

IRA; therefore, not applicable

Yes; Fiduciary Relief through ERISA §404(c)

Yes; Fiduciary Relief through ERISA §404(c)

Yes; Fiduciary Relief through ERISA §404(c)

Yes

Joint and Survivor Rules

Not Applicable

Not Applicable

Option not to apply

Option not to apply

Option not to apply

Applicable

Minimum Distributions

Required at Age 70½ 

Required at Age 70½ 

Required at Age 70½   for >5% owners 

Required at Age 70½ for >5% owners 

Required at Age 70½ for >5% owners 

Required at Age 70½ for >5% owners 

Latest due date for Employer contribution

Due Date of Employer Tax Return or any extension thereof

Due Date of Employer Tax Return or any extension thereof

Due Date of Employer Tax Return or any extension thereof

Due Date of Employer Tax Return or any extension thereof

Due Date of Employer Tax Return or any extension thereof

Due Date of ER Tax Return or any ext. for deduction but no later than 8½ months for minimum funding

Due date to deposit Employee  contributions

Not Applicable

Earliest date employer can transmit contributions

Earliest date employer can transmit contributions

Not Applicable

Earliest date employer can transmit contributions

Not Applicable

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© 2003-2006 ERISA Expertise LLC  All Rights Reserved

The information provided is intended as a general resource, not as investment or retirement planning, or legal plan compliance advice or counsel.  If you consider any actions discussed in this update, we suggest that you consult a qualified planning, tax or ERISA professionalERISA Expertise LLC and Barry R. Milberg do not warrant and are not responsible for any errors and omissions from this update.  Any tax advice included in this written or electronic communication is not intended or written to be used, and it cannot be used, by the taxpayer for the purpose of avoiding any penalties that may be imposed on the taxpayer by any governmental taxing authority or agency.