What is the advantage of the ERISAnswer 401(k) Plan over a SEP?
Advantage 1: Annual Contribution Annual Contribution Limit *Compensation **401(k) SEP $ 50,000 $24,294 $ 9,294 $ 100,000 $33,587 $18,587 $ 150,000 $43,430 $28,430 *Based on the Net Profit of an unincorporated business **These figures do not include any catch-up contributions for those age 50 or older Advantage 2: Participant Loans The second advantage is the ability to take a loan from the plan. The maximum loan is the lesser of 50% of a participants vested balance or $50,000. Advantage 3: Creditor Protection Creditor Protection is available for a 401(k) Plan if the plan is deemed an ERISA plan. If the plan only covers the business owner and/or spouse, then the plan is not deemed an ERISA plan and is subject to the IRA regulations approved by individual state legislatures. However, if the plan covers any other person, even another (non-spouse) family member, then the plan is covered by ERISA and provides creditor protection.
