Retirement and College Savings Plans - Other Employer-Sponsored Plans

While the three plans discussed above are the most commonly used employer-sponsored plans, you should be familiar with several others, including:

Simplified Employee Pension (SEP) IRAs
SEP IRAs were created to provide a simpler alternative to profit-sharing plans. SEP IRAs are easy to establish and run, yet employers may still vary their contributions to the plan from year to year, much in the same manner as with a profit-sharing plan.

Under the rules of a SEP, the employer is required to include all employees that are 21 years old or older and have worked for the employer during three of the last five years.

In 2013, an employer may contribute up to 25% of the employee's salary or $51,000, whichever is lowest, to the employee's individual SEP IRA account.

Learn more about the eligibility requirements, and contributions and distribution rules of SEP IRAs within the tutorial SEP IRAs.

Savings Incentive Match Plans for Employees (SIMPLE)
SIMPLE plans are available for small employers who have 100 or fewer eligible employees (those who make at least $5,000 per year) and who sponsor no other retirement plans for their employees. The SIMPLE contributions may be made either to an IRA or a 401(k). For 2006, employees can choose to contribute up to $12,000 per year via salary deferral. The employer must contribute either a matching amount up to 3% or a non-elective contribution of at least 2%. SIMPLE plans are so named because they require much less paperwork and administrative testing, as well as fewer costs than other employer-sponsored retirement plans.

For participants older than 50 years old, catch-up contributions are permitted up to $2,500 .

457 Governmental Plans
Similar to 403(b) plans, 457 plans are available to governmental organizations such as state, county and municipal employers. They are known as deferred compensation plans, and contributions may only be made by the employee via salary deferral. Maximum salary deferral limits are the same as 401(k) plans ($17,500 plus $5,000 for catch up )

Keogh Plans


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