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JaaFal and its affiliates provides comprehensive retirement guidance tailored to our clients' needs. We've created a robust menu of opportunities and there are virtually no limitations on how a plan sponsor can choose to partner with us.

Find out about the variety of plan types available:

  • JF(k) Profit Sharing Plan
  • Age-Weighted Profit Sharing Plan
  • Money Purchase Plan
  • New Comparability Money Purchase Plan
  • New Comparability Profit Sharing Plan
  • Profit Sharing Plan
  • Simplified Employee Pension (SEP) Plan
  • Safe-Harbor JF(k) / Profit Sharing Plan
  • SIMPLE Individual Retirement Account (IRA) Plan
  • 403(b) Tax-Deferred Annuity Plan
  • 457 Plan
  • Defined Benefit Plan
  • Non-Qualified Deferred Compensation Plan

JF(k) Profit Sharing Plan

  • Allows employees to defer a portion of current compensation
  • Employee retirement plan contributions, up to $11,000 per year
  • Employees age 50 or over are allowed a "catch up contribution" of $1,000 in 2002 (increasing $1,000 per year from 2003 to 2006)
  • Immediate tax deferral on employee's contributions
  • Accumulated earnings also tax deferred
  • Employers may choose to match contributions as a percentage of employee deferrals
  • Employers may also choose to add a profit sharing contribution
Advantages Disadvantages
Employees contribute toward their own retirement savings
Good tool for attracting and retaining employees, particularly with matching employer contributions
Additional nondiscrimination testing required each year (unless a Safe-Harbor JF(k) Plan)
Added costs for recordkeeping and government reporting

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Age-Weighted Profit Sharing Plan

  • Accounts for employee age and compensation in determining share of employer contribution
  • Older employees often receive a greater share of contributions than younger employees
Advantages Disadvantages
Employers can substantially increase contributions for older workers who are often key employees
Employers can minimize contributions for all other employees
May be difficult to communicate plan parameters to employees
All older employees will also benefit from contribution allocation formulas
May be increased administrative costs

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Money Purchase Plan

  • Unique defined contribution plan
  • Employers may deduct contributions up to 25% of compensation for eligible employees
  • Contribution percentages must be stated in the plan documents
  • Contributions must be made each year
  • Plan contributions can be allocated using integration with Social Security or New Comparability methods
Advantages Disadvantages
Excellent tool for attracting and retaining employees
Maximizes amount that can be placed into a participant's retirement account
Employers must make annual contributions as stated in the document, even if employers cannot afford to do so

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New Comparability Money Purchase Plan

  • Also referred to as a Cross-Tested plan
  • Employer required to make contributions as stated in the plan documents
  • Contributions can be up to 25% of compensation for eligible employees
  • Allows employers to divide employees into several groups and allocate different rates/contributions to each group
  • Contributions per group are tested for nondiscrimination using a cross-tested method that converts contributions to future benefits
Advantages Disadvantages
Employers can maximize contributions to key employees and owners
Employers can minimize contributions for all other employee groups
Employers must fund all contributions according to percentage stated in the plan documents
May be difficult to communicate plan parameters to employees
Higher set-up and ongoing administrative costs

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New Comparability Profit Sharing Plan

  • Also referred to as a Cross-Tested plan
  • Employer's contribution is discretionary each year
  • Up to 25% of compensation for eligible employees
  • Allows the employer to divide employees into several groups and allocate different rates of contributions to each group
  • Contributions per group are tested for nondiscrimination using a cross-tested method that converts contributions to annualized future benefits
  • Allows the allocation of employer contributions as a percentage of salary to vary greatly by group
Advantages Disadvantages
Employers can maximize contributions to key employees and owners
Employers can minimize contributions to all other employees
Employers must fund all contributions unless a JF(k) component is added to the plan
May be difficult to communicate plan parameters to employees
Higher set-up and ongoing administrative costs

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Profit Sharing Plan

  • Employer contributions may vary each year
  • Contributions at plan sponsor discretion
  • Typically, contributions are made when company shows a profit
  • Contributions may also be allocated using integration with Social Security methods.
  • Maximum deductible contribution is 25% of compensation for all eligible employees
  • Contributions usually allocated on a ratio of eligible participant compensation versus total participants
  • Note: A profit sharing plan that permits employees to make pre-tax contributions is a JF(k) Plan (see also the description of a JF(k) Profit Sharing Plan and a Safe Harbor JF(k) Profit Sharing Plan).
Advantages Disadvantages
Employers may determine contribution levels in any given year
Employer can use a vesting schedule
Employer may exclude groups of employees as long as coverage rules are satisfied
Employer may control employee access to contributions
Employers bear the responsibility for all plan contributions

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Simplified Employee Pension Plan (SEP)

  • Permits contributions to vary each year
  • Contributions are at the employer's discretion
  • Maximum deductible contribution is 25% of compensation for all eligible employees
  • Contributions are typically made in years that the company shows a profit
  • Contributions usually allocated based on the ratio of eligible participant compensation versus total compensation for all participants
  • Contributions may also be allocated using integration with Social Security methods
  • Employer makes contributions directly to an Individual Retirement Account (IRA) established for each eligible employee
  • Employee retirement plan contributions up to $11,000
  • Employees age 50 or over are allowed a "catch up contribution" of $1,000 in 2002 (increasing $1,000 per year from 2003 to 2006)
Advantages Disadvantages
Employers can establish and contribute to employee retirement plans with limited administrative responsibility
No reporting requirements
No nondiscrimination testing requirements
Employees are always 100% vested
Employees can access IRA funds at any time
Generally not a good tool to attract and retain employees
Excise tax of 10% may be assessed for early withdrawals
Loans are not available

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Safe-Harbor JF(k) Profit Sharing Plan

  • Allows employees to defer current compensation in exchange for a retirement plan contribution, up to $11,000 per year
  • Immediate tax deferral on employee contributions and accumulated earnings
  • Safe harbor match contribution is 100% of the first 3% of compensation deferred, plus 50% of the next 2% of compensation deferred
  • Employer can make a 3% contribution to all eligible employees in lieu of matching contributions
  • Plan is automatically considered to be nondiscriminatory with regard to employee pre-tax and employer matching or non-elective contributions made to the Plan
Advantages Disadvantages
Employers can provide a program that features both employer and employee contributions
No annual nondiscrimination tests
Excellent tool for attracting and retaining employees
Difficult for employees to maximize savings due to restrictions on employer contributions
Required matching or non-elective employer contributions are 100% vested
Annual notice requirement

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SIMPLE Individual Retirement Account (IRA) Plan

  • Allows employers with 100 or fewer employees to establish a retirement program
  • An Individual Retirement Account (IRA) is established for each employee
  • Employees may make pre-tax salary deferral contributions, up to $7,000 per year or 100% of annual compensation
  • Employees age 50 or over are allowed a "catch up contribution" of $500 in 2002
  • Employer must make either a matching contribution for employees who defer compensation, or a non-elective contribution to all eligible employees
  • Matching contributions must be 100% of employee's deferral, up to 3% of pay Non-elective contribution must be 2% of pay
  • All employees eligible to participate if: 1) they receive at least $5,000 pay during any two preceding years and 2) they are expected to receive at least $5,000 during the current year
  • Note: Employers with other types of retirement plans cannot also establish a SIMPLE IRA Plan
Advantages Disadvantages
Requires minimal plan administration
Allows lower income employees to maximize retirement savings
Employees are always 100% vested
Employees can access IRA funds at any time
Not a good tool to attract, retain employees
Excise tax of 25% may be assessed for early withdrawals
Loans are not available

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403(b) Tax-Deferred Annuity Plan

  • May only be sponsored by a tax-exempt 501(c)(3) organization, hospital, educational institution or church
  • Allows employees to defer a portion of current compensation
  • Employee retirement plan contributions, up to $11,000 per year
  • Immediate tax deferral on employee contributions and accumulated earnings
  • Plans may be established as voluntary payroll savings plans or formally sponsored retirement programs (ERISA qualified plans)
  • Invested in either annuities or mutual funds
  • Employer may match a percentage of employee contributions
  • Eligible organizations may also sponsor a JF(k) plan
  • Employees age 50 or older may make a catch up contribution
Advantages Disadvantages
Employees contribute toward their own retirement savings
Employers not eligible to set up a JF(k), can design their 403(b) plan to mirror a JF(k) plan structure
Programs set-up as Voluntary Payroll Savings Plans do not require non-discrimination testing
Good tool for attracting and retaining employees especially with matching employer contributions
Plans established as formally sponsored retirement programs under ERISA will require non-discrimination testing
Additional compliance and reporting requirements if employer matches employee contributions
Employer cannot exclude any employee groups

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457 Plan

  • Exclusive plan type for State or Local government entities
  • May be available to tax exempt organizations (except churches) but only designed as either an excess benefit plan or a top-hat plan
  • Allows employees to defer a portion of current compensation in exchange for retirement plan contributions, up to $11,000 per year
  • Allows immediate tax deferral on employee contributions and accumulated earnings
  • May allow for employer matching contributions
  • May allow for employer discretionary, non-elective contributions
  • Note: State or Local government entities may not sponsor a JF(k) plan unless adopted before May 6, 1986
Advantages Disadvantages
Employees contribute toward their own retirement savings
Employees contribute on a pre-tax basis
Additional "catch up" provision for participants within three years prior to retirement
Generally low participation levels
The $11,000 limit applies to all types of contributions (employer and employee)

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Defined Benefit Plan

  • Qualified plan that provides a definitive benefit amount at retirement
  • Benefit is typically stated as a monthly payment based on employee compensation and length of employment
  • Benefit is payable at the plan's normal retirement age, typically age 65
  • Benefits can also be payable at an earlier age, on a reduced amount basis
  • Older owner with younger employees can maximize their own contributions
  • Contributions for employees can be kept to a minimum
Advantages Disadvantages
Employers with good, consistent cash flow can provide guaranteed retirement benefits for employees
Employer may contribute the greatest amount in the shortest period of time if employees have not saved enough for retirement
Can be offered in addition to defined contribution program in order to maximize employee benefits
More expensive to administer than defined contribution plans
Higher administrative costs: includes actuarial fees and Pension Benefit Guaranty Corporation insurance premiums

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Non-Qualified Deferred Compensation Plan

  • Generally established for a select group of executives or key employees
  • Represents a promise to compensate employees for services currently rendered, but with actual payment for services to be made in the future
  • Can also be used to provide benefits that are capped by statutory limitations on the amount of compensation or benefits available under qualified plans
  • Contributions are generally not deductible by the corporation until the employee receives the benefits
  • Contributions typically made in stocks, mutual funds, insurance products or other securities
Advantages Disadvantages
Corporations can provide key executives with benefits while excluding the balance of the workforce
Allows contributions to exceed legal limits of qualified plans
Can be expensive to fund and administer
No tax deduction may be taken until benefits are paid or available
Assets are the property of the corporation and may be subject to creditor claims

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