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I agree that you can break through the 30k barrier. DB Plans are historically more expensive. 401k Plans for small business can be had for $1,200 per year or less.Including all testing, Trustee services, & IRS filings. The Mutual Fund company I work for, actually charges a little less. (No asset based fees either, so stay away from the Insurance companies and their group annuity contracts!). DB Plans run in the neighborhood of $3,000. (Trustee, Actuaries,& Administration) However, if the business owner can break the 30k barrier, it is often worth the extra cost. Often times though, the business owner does not want to commit to the contributions for the other workers. The cry that is always heard is
--How much can I do for myself?
--How little can I do for my workers?
--& How much is it going to cost?
It all depends on what the business owner is looking to accomplish, and his/her own situation. Age, salary, etc. & how much they are willing to give to their employees. Only then can Plan design be considered.
SEPs and SIMPLEs often mke sense because the business owner wants no administration costs or reporting requirements and does not want to contribute alot to the employees. With SIMPLEs a business owner and a spouse on the payroll can put away $12,000 per year, plus employer matching. He then only has to make a 3% match to participating employees, and can adjust that down to 1% in 2 out of 5 years. They can also opt for a 2% contribution to all eligible employees.
401ks have adiminsitrative costs and reporting requirements and employer contributions are not required. Although they have a higher deferral limit ($10,500 vs $6,000 in the SIMPLE) The maximum deferral may not be achievable if the non highly compensated employees do not participate or contribute at low levels.
Paired Plans (Keough) are totally employer funded and require reporting and have higher admin costs than 401ks. (You are running 2 plans instead of 1, a money purchase pension and a profit sharing.)
Defined Benefit Plans potentially allow the largest contribution. You can defer up to $140,000,(2001). This is all employer funded, so you really only see funding at these levels for self employed older individuals who are taking in a high amount of income. For those that can afford it, this is definitely the way to go.

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