Other 401(k) and Profit-Sharing Plans
Traditional and safe harbor 401(k) and profit-sharing plans for any business
What Are the Other 401(k) and Profit-Sharing Plans?
Traditional 401(k), Safe Harbor 401(k) and profit-sharing plans offer flexible features. They provide an easy way to save, and offering one can help attract and keep quality employees.
What Are the Benefits?
Contributions are a deductible business expense
Employer chooses plan type that works best for the business’s needs
Helps attract and retain employees
What Type of Employer Can Open This Plan?
• Employers of almost any kind of business can open these plans.
Who Contributes to the Plan?
• Employers
Traditional 401(k) and Profit Sharing plan employers can make optional contributions. Employer contributions are mandatory for Safe Harbor 401(k) plans. Employers choose a vesting schedule for all plans.¹
Traditional 401(k) employers can match contributions up to 25% of compensation. Safe Harbor employers can match up to 3% of compensation plus $0.50 for each dollar above 3% and to 5%, an enhanced matching formula, or at least 3% non-elective contribution to all employees.
Discretionary or mandatory contributions, plus matching, can be made up to 25% of an employee’s compensation or $70,000* (whichever is less).
Beginning in 2025, certain Traditional 401(k) and Safe Harbor plans established after 12/29/2022 must establish automatic enrollment and automatic escalation.
• Employees
Employees can make after-tax Roth or pretax Roth contributions up to $23,500* if the plan permits.
If the plan allows, those age 50+ can make an additional $7,500 in catch-up contributions. Employees age 60 to 63 can make up to 150% of the catch-up limit.
What Are the Differences Between the Plans?
Compare the features of each of the plans to determine which might work best for your business. Some employers choose to open both a 401(k) and profit-sharing plan when it fits their needs.
Discretionary employer contributions | Mandatory employer contributions | Salary deferrals, including Roth | Annual ADP/ACP testing** | Vesting schedule | |
|---|---|---|---|---|---|
Traditional 401(k) | ◼ | ◼ | ◼ | ◼ | |
Safe Harbor 401(k) | ◼ | ◼ | ◼ | ||
Profit Sharing | ◼ | ◼ |
What Investment Options Are Available?
You choose which funds are available for you and your employees from a variety of mutual funds. Or consider a pre-diversified portfolio built by our professionals. It's a convenient way to choose based on when you'll need the money or the risk level that fits your goal. And it takes the guesswork out of picking investments.
What Are the Other Plan Benefits?
Retirement education and tools to help you and your employees plan for retirement, or one-on-one guidance from a consultant upon request.
Convenient services based on how you want to work with us, including online access to track investments and make changes.
Secure Plan Sponsor Access online tool for convenient plan management.
Distribution services available for tax reporting.
Review Other Options
Compare plans and benefits to find the one that best fits your business.
Things to Know Before You Get Started
Deadline to Establish
Traditional 401(k) and profit-sharing plans may be established by the employer’s tax filing deadline, including extensions.
Safe Harbor 401(k)s must be effective at least three months during the first plan year.
Plan Administrator Responsibilities²
Distribute completed Summary Plan Description.
File IRS Form 5500 annually.
Distribute applicable employee notices and disclosures.
Distribute annual 404(a) Participant Disclosures (found under the Meet Employee Disclosure Rules section).
Perform appropriate IRS testing based on plan features.
Update plan documents and provisions as required by law.
Participant Fees
Annual $25 service fee is deducted from participant accounts.
Retirement Plans
With American Century Investments
Products and services to fit the needs of you and your employees, plus the ability to invest in others.
Get Support and Guidance
Education and tools—plus guidance upon request—can help you and any employees plan for retirement. It starts with helping you choose the right plan.
Find Investment Opportunities
You and your employees can build a diversified portfolio that aligns with your risk comfort level, time horizon and retirement goals.
Make an Impact
When you invest with us, you can also invest in the future of others. Together we can become a powerful force for good.
Establish the Plan
Complete the Plan Paperwork
Review the Plan Document. If you need a Plan Document, please contact us.
Review the § 408(b)(2) Service Provider Disclosure and the Retirement Plan Services Agreement.
Complete the Retirement Plan Services Application to send to us in a later step.
Complete the Adoption Agreement and make a copy. Retain the original for your records and send the copy to us in a later step.
Inform Employees
Complete and distribute the Summary Plan Description and Appropriate Notices to all eligible employees.
Instruct employees to complete the Salary Reduction Agreement and return completed forms to you. Retain the originals for your records.
Instruct employees to designate beneficiaries by completing the beneficiary form and retaining it for your records. Do not return to us.
Send the Documents
Gather the Retirement Plan Services Application, a copy of the Adoption Agreement, and copies of the Participant Investment Elections forms from employees.
Mail forms to:
American Century Investments
PO Box 419385
Kansas City, MO 64141-6385
Or FAX to 1-888-327-1997
Contribute to the Plan
Sign up for Plan Sponsor Access to submit contributions electronically through our secure online tool. Contact us at 1-800-345-3533 to get a username and password.
Or complete the Purchase Guidelines to submit contributions.
Limits listed are for 2025. The IRS sets limits annually.
The ADP test (Actual Deferral Percentage) tests pretax and after-tax Roth elective deferrals. The ACP test (Actual Contribution Percentage) tests matching and voluntary after-tax contributions. Source: Actual Deferral & Actual Contribution Percentage Tests (ADP/ACP), Investopedia, June 29, 2021.
Contributions may only be based on the first $345,000 compensation, as adjusted. Combined employer and employee is limited to 100% of compensation or $69,000, whichever is less, excluding catch-up contributions.
Additional Plan Administrator responsibilities apply.
This material has been prepared for educational purposes only. It is not intended to provide, and should not be relied upon for, investment, accounting, legal or tax advice.
IRS Circular 230 Disclosure: American Century Companies, Inc. and its affiliates do not provide tax advice. Accordingly, any discussion of U.S. tax matters contained herein (including any attachments) is not intended or written to be used, and cannot be used, in connection with the promotion, marketing or recommendation by anyone unaffiliated with American Century Companies, Inc. of any of the matters addressed herein or for the purpose of avoiding U.S. tax-related penalties.
This information is for educational purposes only and is not intended as tax advice. Please consult your tax advisor for more detailed information or for advice regarding your individual situation.
You could lose money by investing in a mutual fund, even if through your employer's plan or an IRA. An investment in a mutual fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.
Diversification does not assure a profit nor does it protect against loss of principal.
Please consult your tax advisor for more detailed information regarding the Roth IRA or for advice regarding your individual situation.
Taxes are deferred until withdrawal if the requirements are met. A 10% penalty may be imposed for withdrawal prior to reaching age 59½.