As a leading provider of retirement plan services, Legend can assist your organization
with the design, implementation and maintenance of a §401(k) plan.
Eligible Employers
All employers except governmental agencies
Eligible Employees
The plan will set certain parameters for eligibility to participate,
such as one year of service and attainment of age 21
Elective Deferral Limit
The lesser of 100% of the participant’s compensation or $17,000 in 2012
Over Age 50 Catch-up
$5,500 in 2012 (may not be offered under all employer plans)
Employer Contributions
Employer may make non-elective and/or matching contributions
Maximum contribution of 25% of participant’s salary with annual addition maximum (employer plus employee combined) capped at $50,000 in 2012 ($54,500 with Over Age 50 Catch-Up)
Taxation
Pre-tax contributions are taxed when paid out to the participant
Roth contributions are tax-free if paid out as qualified
distributions (after five years have elapsed since the first Roth
contribution was made and the participant has attained age
59½) (may not be offered under all employer plans)
Loans1
Participants may take a loan in an amount that is one half of the account up to $50,000
Loans are an optional plan feature and must be qualified on an employer plan basis
Hardship Distributions
Distributions may be taken if the participant meets the
guidelines established under §401(k) rules (optional plan feature)
Rollovers into Plan
Participants may rollover distributions from other eligible retirement accounts into the employer’s §401(k) plan (optional
plan feature)
Premature Penalty
Applicable on distributions taken prior to age 59½ unless the
participant meets the age 55 exception (retires in year age 55 is
attained or later)
Reporting Requirements
Form 5500 is required annually
Nondiscrimination Testing
Testing is required unless a safe harbor plan is adopted
Required Minimum Distributions
A participant must begin taking distributions at the later of attainment of age 70½ or
retirement. The first minimum distribution must be taken by April 1st of the year following the year containing this triggering event.
1Defaulting on a loan from a retirement plan constitutes a distribution from that plan.
Distributions from a retirement plan may be subject to federal income tax in the year distributed and may incur an additional 10% penalty if the participant is under age 59½.
Legend Equities Corporation and its affiliates do not provide tax information or advice.