Plan Options
RKL Private Wealth offers a variety of retirement plans.
401(k) Profit-Sharing Plan
A 401(k) profit-sharing plan is a retirement savings option where both you and your employee contribute to their account. It combines the benefits of a traditional 401(k) with profit-sharing, allowing you to contribute to your employees’ retirement with a matching contribution and based on your company’s success.
Single profit-sharing plans are established and maintained by one employer for their employees. As the employer, you are responsible for plan administration, including compliance, investment selection and fiduciary duties. You can, however, hire outside providers to assist you.
Benefits for Employers
Flexible contribution options. You can adjust contribution amounts based on your company’s performance, offering a matching and/or a discretionary benefit that can be increased during profitable years or reduced during lean periods.
Tax benefits. You’ll enjoy tax advantages as employer contributions are tax-deductible, potentially lowering your company’s overall tax liability.
Talent attraction and retention. Offering a profit-sharing 401(k) plan can enhance recruitment and retention efforts and make your company more appealing to prospective and current employees.
Enhanced employee motivation. A profit-sharing plan increases employee motivation by providing them with a direct stake in the company’s success, encouraging them to contribute to its profitability.
Strategic vesting schedules. Implementing vesting schedules promotes long-term employee commitment and loyalty, aligning their interests with the company’s growth.
Benefits for employees
Enhanced retirement savings. Your contributions significantly increase your employees’ retirement savings, potentially accelerating their progress toward financial goals.
Pathway to financial security. Your employees can benefit from tax-deferred growth on contributions and earnings and the option to make Roth (after-tax) deferrals, helping them build a more secure financial foundation for retirement.
Shared success and profitability. When you implement profit-sharing contributions, employees can directly benefit from your company’s success, fostering a sense of shared ownership and motivation.
Tax advantages. Tax-deferred employee elective deferrals and investment gains optimize tax efficiency until retirement distributions.
Pooled Employer Plan 401(k) Profit Sharing Plan (PEP)
Introduced under the SECURE Act in 2019, a PEP allows unrelated employers to participate in a single pooled 401(k) plan with different plan provisions per employer. PEPs are administered by a pooled plan provider.
Benefits
Cost efficiency: Benefit from a cost-effective solution that optimizes expenses related to retirement plan management.
Simplified administration: Experience reduced fiduciary and administrative responsibilities, allowing you to focus more on your business operations.
Ideal for any size business: Perfect for small and medium-sized companies looking to offer retirement plans without the complexity and burden of managing stand-alone plans. Larger audit size plans can benefit from the elimination of the individual plan audit as the PEP is audited at the PEP level with all employers included to reduce cost and the onsite work involved in the audit process.
For more details about PEP and to see if it’s the right plan for you, visit our PEP page.
Multiple Employer Plan 401(k) (MEP)
An MEP allows a group of employers, traditionally in the same industry or trade association, to participate under a single 401(k) plan structure. The lead sponsor or plan administrator manages the plan, reducing the administrative burden on the participating employers. However, each employer is still responsible for the fiduciary duties.
Cost efficiency and simplified administration
Achieve lower operational costs and streamlined administrative processes through economies of scale.
Reduced administrative burden
Benefit from significantly fewer administrative duties, allowing you to focus on core business activities.
Lower costs through asset consolidation
Enjoy reduced expenses by leveraging greater plan asset totals, leading to more favorable pricing and investment options.
457(b) Deferred Compensation Plan
A 457(b) plan is a tax-advantaged retirement savings plan sponsored by state and local government agencies and some tax-exempt organizations for their employees. Think of it as a way to save for retirement with similar benefits to a 401(k) but with some key differences.
Benefits
Contribution options: Deferral contribution limits are comparable to a 401(k) or 403(b) plan. A 457 plan can offer both pre-tax and Roth employee deferral ability for employees. Typically, employer contributions are made to a separate account, such as a 401(a) plan or another retirement plan, as the IRS limits in a 457(b) plan include both employee and employer contributions.
Flexible withdrawals: Employees may withdraw funds from the 457(b) before age 59½ penalty-free if they are no longer employed by the plan sponsor. However, withdrawals are subject to ordinary income tax.
Tax advantages: Tax-deferred employee elective deferrals and investment gains optimize tax efficiency until retirement distributions.
Cash Balance Plan
A cash balance plan can help business owners turbocharge their retirement savings beyond the limits of a traditional 401(k) Profit Sharing Plan or IRA. Unlike defined contribution plans, cash balance plans provide a specific benefit at retirement to eligible employees, can work with an existing defined contribution plan and have generous contribution limits that increase with age.
- Financial Advantages & Tax Benefits
Plan Structure, Flexibility & Employee Benefits
Maximized savings and tax benefits
As a business owner, you can boost retirement savings and receive significant tax deductions.
Tax-deferred contributions
Pay taxes only upon withdrawal, potentially lowering tax liability if you’re in a lower tax bracket at retirement.
Combine with other plans
Pair with defined contribution plans like a 401(k) Profit Sharing plan for enhanced retirement tax benefits.
Custom contribution limits
Limits are significantly higher than those of a defined contribution plan, influenced by income, age, and retirement goals.
Distribution Options
Participants can choose a lump sum payment, lifetime annuity, or other options such as period certain annuities or a combination of lump sum and annuity payments when they retire or leave employment.
Flexible plan structure
Tailor the plan to meet goals like retaining key employees and managing costs, with adjustable contribution levels for different employee groups.
Predictable benefits
Employees receive a guaranteed retirement benefit without bearing investment risks.
