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Erisa Rules For Profit Sharing Plans In Wake
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Multi-State
County:
Wake
Control #:
US-001HB
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FAQ
Vesting. Your contributions to the plan can either be fully vested (nonforfeitable) when made, or they can vest over time ing to a vesting schedule. If you require 2 years of service to participate, all contributions are immediately vested. All participants must be vested ing to plan terms.
Since a profit-sharing plan is a “qualified retirement plan,” it must also comply with all applicable rules under ERISA.
Qualified plans include 401(k) plans, 403(b) plans, profit-sharing plans, and Keogh (HR-10) plans. Nonqualified plans include deferred-compensation plans, executive bonus plans, and split-dollar life insurance plans.
Plans that fall under ERISA include defined benefits and defined contributions plans, 401 plans(k), 413b plans, EPSOPs, or profit-sharing plans. ERISA also covers private health plans such as health maintenance organizations (HMOs) and Flexible Spending Accounts (FSAs).
In general, ERISA does not cover plans established or maintained by governmental entities, churches for their employees, or plans which are maintained solely to comply with applicable workers compensation, unemployment or disability laws.
Traditional profit sharing plans are subject to annual testing to ensure that the contributions made for rank-and-file employees are proportional to contributions made for owners and managers.
Accounts Covered by ERISA Common types of employer-sponsored retirement accounts that fall under ERISA include 401(k) plans, pensions, deferred-compensation plans, and profit-sharing plans. In addition, ERISA laws don't apply to simplified employee pension (SEP) IRAs or other IRAs.