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This plan design gives you more options to tailor for your needs. Top things to know about Traditional plans:
To match or not to match–employers decide whether to provide a match or not and offers more options on how to structure the match.
Allows employers to establish vesting and/or eligibility rules to retain and reward loyal associates.
Tip: Automatic enrollment is typically a good idea with any plan design but is often more essential with traditional plans to help the plan better meet IRS testing requirements.
Traditional plans are a smart option for businesses who have highly seasonal cash flows, experience relatively high employee turnover, or need the flexibility to leverage a different match amount than a Safe Harbor would require. The ability to add in multi-year vesting schedules also makes these plans a valuable tool for employee retention and to help reduce costly turnover. In addition, eligibility rules can simplify administration and plan costs for businesses that have seasonal work forces.
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