The Edge - Quarter 4, 2008 - (Page 34)

contributions. An individual account must be set up for each participant in the plan, and employees themselves choose from a number of investment options. The benefit at retirement depends on the amounts contributed and on the investment performance of the account through the years. These plans take many forms and are known by various names such as profit sharing, money purchase, 401(k), or 403(b) plans. Defi ned contribution plans include: Profit-Sharing Plans—Contributions in these retirement plans are made solely by the employer. The employer has the flexibility to contribute and deduct up to 25 percent of a participant’s eligible compensation each year. The employer invests the money, and employees pay taxes only when the money is distributed, generally upon retirement. Profit-sharing plans are a good option for small businesses because they offer the greatest flexibility; an employer can contribute to the plan in profitable years and not contribute in lean years. Profitsharing plans are also relatively easy to administer. They allow employers to contribute to an employee’s account and offer tax-deferred savings and business tax deductions. Money Purchase Plans—These are similar to profit-sharing plans, except annual fi xed-percentage employer contributions are mandatory as prescribed in the terms of the plan. This means an employer must contribute to the plan even when it does not have a profitable year. Employee Stock Ownership Plans (ESOP)—An ESOP is a type of employee benefit plan, similar in some ways to a profit-sharing plan. In an ESOP, a company sets up a trust fund into which it contributes new shares of its own stock or cash to buy existing shares. The shares of the company stock have to vest before a participant receives them. Company contributions to the trust are tax-deductible, within certain limits. Shares in the trust are allocated to individual employee accounts. Traditional 401(k) Plans—For any type or size employer, traditional 401 (k) plans enable an employee to defer up to $15,500 in 2008 with a $5,000 catchup contribution (for individuals age 50 and older). There are no employer limitations (such as number of employees) and there is no required contribution on the employer’s part. If employers do make a matching contribution, vesting generally occurs on a graduated scale. Participants are allowed to borrow money from their accounts. These plans are subject to nondiscrimination testing and top heavy rules. Safe Harbor 401(k) Plans—For any size employer, this plan is similar to the traditional 401(k), but with several major differences. With this plan, employers are required to make contributions which participants are 100 percent vested in at all times. Also, these plans are not subject to nondiscrimination testing and are generally not subject to top heavy rules. Simple 401(k) Plan – With this plan, the employee maximum deferral 382777_AquaticParts.indd 1 34 www.nespapool.org 6/4/08 5:32:12 PM 357439_CoverTech.indd 1 12/10/07 11:07:23 AM http://www.covertechfab.com http://www.baystatepools.com http://www.nespapool.org

Table of Contents Feed for the Digital Edition of The Edge - Quarter 4, 2008

The Edge - Quarter 4, 2008 Contents The President’s Message New Pool/Spa Federal Safety Act Worried About the 2009 Market? Treating Hot Water? Project Focus The 411 on UV Disinfection for Pools and Spas The Advantages of Seeding Aggregate Surfaces Pool and Spa Industry Wins Gold Choosing a Retirement Plan To Get Best Coverage at Lowest Cost - Shop Now Index of Advertisers

The Edge - Quarter 4, 2008

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