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2013 NOT-FOR-PROFIT RETIREMENT PLAN COMPARISON

  Print Version

By Kristie Farmer Senior Benefits Specialist

A retirement plan can have a lot of benefits for non-profit organizations and their employees. Experts estimate that workers will need 70 to 90 percent of their pre-retirement income to maintain their current standard of living when they retire. By sponsoring a retirement plan, an organization will help their employees save for their future. In addition, offering a retirement plan can help attract and retain qualified employees.

There are various types of retirement plans that tax-exempt and governmental entities can establish. Some plans allow employees to invest a portion of their salary before it is taxed. Other plans allow for employer contributions. All money in the retirement plan grows tax-free until a distributable event occurs. Various retirement plan information resources are available at www.irs.gov/retirement. Below is a brief summary of information available on their webpage:

Type of Plan Advantage Eligible Employer Contribution Overview

Allowable Employee Contributions

SEP

 

Easy to set-up and maintain Any employer Only employer contributions – and can be discretionary each year No
SIMPLE IRA Salary reduction plan with little administrative work Employer with fewer than 100 employees Employees can decide how much to contribute and employer must make a specified contribution each year $12,000 in 2013 plus $2,500 catch-up contribution for those over age 50
401(k) Permits high level of salary deferrals by employees and may include a Roth feature Any non-government employer Employee elective deferral contributions and employer contributions are permissible but not required $17,500 in 2013 plus $5,500 catch-up contribution for those over age 50
403(b) Permits high level of salary deferrals by employees and may include a Roth feature 501(c)(3) organizations and public education employers Employee elective deferral contributions and employer contributions are permissible but not required $17,500 in 2013 plus $5,500 catch-up contribution for those over age 50

457(b)(Governmental)

Permits high level of salary deferrals by employees and may include a Roth feature State and local governments Employee elective deferral contributions and employer contributions are permissible but not required $17,500 in 2013 plus $5,500 catch-up contribution for those over age 50
457(b)(Tax-Exempt Organization) Permits high level of salary deferrals by employees Any tax-exempt organization Employee elective deferral contributions and employer contributions are permissible but not required $17,500 in 2013 plus $5,500 catch-up contribution for those over age 50

A 403(b) plan is very similar to a 401(k) plan. The basic difference is that a 403(b) plan cannot be established by a for-profit organization and they are exempt from a few administrative processes that could apply to 401(k) plans. Thus, it is possible that administrative costs could be lower for a 403(b) plan.

Each type of plan can allow for various eligibility requirements and plan provisions. Some require annual filing requirements. If you are interested in learning more about various retirement plan options, please contact your local Blue & Co. office.

 

If you have any questions regarding the article above or any other issue affecting your not-for-profit organization please contact your Blue & Co. advisor or e-mail us at blue@blueandco.com or call us at 800-717-BLUE

 

Please visit our website at http://www.blueandco.com for more information regarding the services we provide.

CIRCULAR 230 DISCLOSURE: To ensure compliance with recently-enacted U.S. Treasury Department Regulations, we are now required to advise you that, unless otherwise expressly indicated, any federal tax advice contained in this communication, including any attachments, is not intended or written by us to be used, and cannot be used, by anyone for the purpose of avoiding federal tax penalties that may be imposed by the federal government or for promoting, marketing or recommending to another party any tax-related matters addressed herein.


 

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