| Features |
SIMPLE IRA |
|
ADP 401(k) |
| Eligibility |
Businesses with 100 or fewer eligible
employees, (who earn at least $5,000) who do not maintain any other
retirement plan |
|
All private companies as well as tax-exempt
entities (other than most governmental units) |
| Key Advantages |
Less administration and government reporting,
and no participation requirements |
|
Flexible vesting schedules
and higher contribution limits |
| Funding Responsibility |
Employee salary reduction
contribution and employer contributions |
|
Employee salary reduction
contributions and optional employer contributions |
Annual
Employee/Participant Contribution |
Employee: Up to the lesser of 100% of compensation or $10,500
per year for 2008
Employer: Either match employee contributions dollar-for-dollar
up to 3% of compensation (can be reduced to as low as 1% in any
2 out of 5 years)
|
|
Employee: Depending on plan design could be up to 90% of
compensation, up to a maximum of $15,500 in 2008
Employer/Employee: Overall, total Employer/Employee contributions
combined legally cannot exceed the lesser of 100% of compensation
or $46,000 for 2008
|
| Withdrawals |
Withdrawals at any time. If employee is
under age 59 1/2, withdrawals generally may be subject to a 25% penalty
if taken within the first two years of beginning participation and
a possible 10% penalty applies after that time up to age 59 1/2. |
|
Cannot take withdrawals from a plan until a "trigger"
event occurs. May offer loan provisions and allow withdrawals in
certain hardship situations. (Hardship withdrawals may be subject
to possible 10% penalty if participant is under age 59 1/2.)
|
