Money Purchase
Employer s commit to a fixed annual funding. You can contribute up to 25% or $40,000, whichever is less, of each eligible employee's compensation. No employee contributions are allowed in this type of plan. Contributions, in general, can be allocated to participants in two different ways:
1. |
Non-integrated |
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Every employee receives the same percentage of covered compensation. |
2. |
Integrated |
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Employees who have earnings exceeding, typically, the social security wage base receive extra benefits on their earnings over the social security wage base. For example, employees could receive a contribution of 3% of earnings up to the social security wage base, plus 6% of earnings exceeding the social security wage base. |
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