Plan type

Summary

Annual plan limits*

Key feature

Notes

Traditional 401k

For any type or size company. Funded by employee elective deferrals and optional employer matching.

$15,500 in employee deferrals and up to $30,500 in optional matching funds; catch-up limit: $5,000

Matching contributions can be vested over time.

Requires yearly discrimination testing to prevent investing primarily from highly-compensated staff members.

403b

For any non-profit business, government entity, or educational institution. Funded by employee elective deferrals and optional employer matching.

$15,500 in employee deferrals and up to $30,500 in optional matching funds; catch-up limit: $5,000

“15-Year Rule”:  employees with 15 years service can contribute an additional $15,000 over five years.

Typically features fewer investment options than traditional 401k plans.

Safe Harbor 401k

For any size company. Funded by mandatory employer & optional employee contributions.

$46,000 (total employee and employer contributions); catch-up limit: $5,000

Employer contributions 100% vested from day one. No discrimination testing required.

Employer must make contributions even when business is not doing well.

SIMPLE 401k

For businesses with 100 employees or less and no other retirement plan.

$10,500 (total employee and employer contributions); catch-up limit: $2,500

Employer contributions 100% vested from day one. No discrimination testing.

Considerably lower annual limits than traditional 401k plans.

Solo 401k

For self-employed, sole proprietors, partnerships, corporations, S-corporations. Covers owner and spouse only. Funded by salary and profit share contributions.

$46,000; catch-up limit: $5,000

Features high contribution limits.

Must convert to traditional 401k or SIMPLE 401k once you add any non-spousal employees.

SEP-IRA

For self-employed and small businesses under 25 employees. Funded by employer contributions only.

$46,000 (based on years of service, performance, and employee salary)

Employer contributions 100% vested from day one.

Can supplement with another retirement plan.

SIMPLE IRA

For small businesses with 100 employees or fewer. Funded by mandatory employer & optional employee contributions.

$10,500 (matched or fixed contributions); catch-up limit: $2,500

Employer contributions 100% vested from day one. Can reduce contributions when business is not doing well.

Considerably lower annual limits than traditional 401k plans.

KEOGH

For law partnerships, medical practices, and family businesses with 10 or fewer highly paid employees. Funded by employee and employer contributions.

$46,000 (for a defined contribution); $175,000 (defined benefit)

Defined contribution: Amount employees receive at retirement varies based on years of service, earnings, expenses, gains, & losses
Defined benefit: Formula provides fixed monthly income upon retirement

Defined benefit is very complex; employer responsible for administration and investment choices.
Defined contributions allow employees to make their own investment decisions.