Most, if not all, ESOP companies also have a 401(k) plan. Employers should view these two programs together - not separately.
Discussion topics include:
- What should be your company's targeted annual retirement plan benefit for covered employees? Is it 5% of compensation, 7% of compensation, 10% of compensation?
- Discuss how to structure the annual ESOP contribution to hit that target, when combined with the company's (match) contribution to the 401(k) plan. This is especially relevant in a leveraged ESOP when you are deciding what the term of the ESOP Loan (and, therefore, the annual Company contribution for payment of principal and interest) should be.
- How to use the Company's ESOP contribution to make your Company's 401(k) Plan "safe harbor".
- How to use the Company's 401(k) Plan for transfers of diversification-eligible distributions from the ESOP.
- Understand how the limits on annual deductions and on annual additions to individual accounts work when you have both an ESOP and 401(k) Plan.
Presenter: John R. Nelson, Managing Director, NFP Retirement, Inc
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