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Financial Planning / Foolish 401(k)s
|Subject: Re: Business 401k or not?||Date: 7/15/2012 12:46 AM|
|Author: aj485||Number: 24920 of 25322|
First you wrote " part timers provided that they do not work 1,000 hours, are under 21 and have been there less than 1 year. If someone hits all 3 of those marks, they will be eligible" did you mean over 21.
No. Those UNDER 21 can be excluded, not those OVER 21.
Second, if I had eligible employees can the 401k be created without a match option? If the has to be a match option is there a minimum percentage that has to be mathed?
As the owner of the company, if you do not provide a safe harbor match, you will be limited in the amount that you can contribute by the 'highly compensated employee' rules. So, yes, you can set up a 401(k) without providing a match, but you may limit your ability to make your own contributions.
Here are the requirements for the safe harbor match, from the previous link:
Safe Harbor 401(k) plan
Under a safe harbor plan, you can match each eligible employee’s contribution, dollar-for-dollar, up to 3 percent of the employee’s compensation, and 50 cents on the dollar for the employee’s contribution that exceeds 3 percent, but not 5 percent, of the employee’s compensation. Alternatively, you can make a nonelective contribution equal to 3 percent of compensation to each eligible employee’s account. Each year you must make either the matching contributions or the nonelective contributions.
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