Comparison of Common Retirement Plans
Contribution Detail Differences
Below, we have outlined key contribution details for each common retirement plan. For more information, see the comparison chart below.
401(k) – Contribution Details
Who Can Contribute?
Employee; employer contributions are optional
Employee Contributions
- $22,500 salary deferral allowed
- Additional $7,500 catch-up contribution (50 years or older)
- Contributions may be pretax or post-tax (Roth)
Employer Contributions
Employer contributions are optional
Maximum Annual Contribution Per Participant
Employer/Employee Combined: Up to the lesser of 100% of compensation or $66,000 ($73,500 if 50 years or older)
Safe Harbor 401(k) – Contribution Details
Who Can Contribute?
Employee and employer
Employee Contributions
- $22,500 salary deferral allowed
- Additional $7,500 catch-up contribution (50 years or older)
- Contributions may be pretax or post-tax (Roth)
Employer Contributions
Employer can either contribute:
- Four methods of profit sharing allowed
- Mandatory 4% employer match (100% up to 3%, 50% on the next 2%)
Or they can contribute:
- 3% non-elective employer contribution.
- Match formula may be enhanced. (Note: Match can be applied to any deferral up to 6%)
Maximum Annual Contribution Per Participant
Employer/Employee Combined: Up to the lesser of 100% of compensation or $66,000 ($73,500 if 50 years or older)
Simple IRA – Contribution Details
Who Can Contribute?
Employee and employer
Employee Contributions
- $15,500 salary deferral allowed
- Additional $3,500 catch-up contribution (50 years or older)
- Post-tax (Roth) contributions are not available
Employer Contributions
Employer can either contribute:
- Mandatory 3% employer match – three out of five years (1% minimum required for other two years)
Or they can contribute:
- 2% non-elective employer contribution
- Additional employer contribution is not allowed
Maximum Annual Contribution Per Participant
- Employee: $15,500 (if 50 years or older, an additional $3,500 allowed)
- Employer: Must make matching contributions up to 3% of employee compensation or contribute 2% of total eligible employee compensation (Maximum compensation limit is $330,000 in 2023)
SEP IRA – Contribution Details
Who Can Contribute?
Employer
Employee Contributions
None—contributions are generally by employer only
Employer Contributions
Employer can decide whether to make contributions year-to-year
Maximum Annual Contribution Per Participant
Up to 25% of compensation (Maximum compensation limit is $330,000 in 2023), but no more than $66,000
For more information, see the comparison chart below:
This content is for educational purposes only, is not intended to provide specific legal advice, and should not be used as a substitute for the legal advice of a qualified attorney or other professional. The information may not reflect the most current legal developments, may be changed without notice and is not guaranteed to be complete, correct, or up-to-date.
This content is for educational purposes only, is not intended to provide specific legal or financial advice, and should not be used as a substitute for the legal advice of a qualified attorney or financial professional. The information may not reflect the most current legal developments, may be changed without notice and is not guaranteed to be complete, correct, or up-to-date.