Businesses, Corporations, or Self-Employed Individuals Comparison

American Century Investments® has developed this comparison to help you select the plan that's best for you. The information in this table compares and explains five of the most common retirement plan options for self-employed individuals and business owners.

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Compare Plans Offered by American Century Investments:
SEP IRA SIMPLE IRA (Designated Financial Institution) Profit Sharing Plan Traditional 401(k) Individual 401(k) Plan Safe Harbor 401(k) Plan
Contribution Types and Limits1,7

Discretionary employer contributions

For 2014, up to 25% of compensation2 or $52,000, whichever is less

Employee salary deferrals up to $12,000 ($14,500 if age 50 or over) for 2014, or 100% of compensation if less

Dollar-for-dollar employer match up to 3% of compensation OR a non-elective contribution of 2% of compensation2

Discretionary employer contributions

Up to 25% of total participant compensation2 with no more than $52,000 to any one participant for 2014

Employee salary deferrals up to $17,500 ($23,000 if age 50 and over) for 2014

Discretionary profit sharing and/or matching employer contributions up to 25% of compensation2

The total of salary deferral, discretionary and matching contributions cannot exceed the lesser of  $52,000 or 100% of compensation for 2014

 

Employee salary deferrals up to $17,500 ($23,000 if age 50 or over) for 2014

Discretionary profit sharing contributions up to 25% of compensation2

The total of salary deferral and discretionary contributions cannot exceed the lesser of $52,000 or 100% of compensation for 2014

Employee salary deferrals up to $17,500 ($23,000 if age 50 or older) for 2014

Discretionary profit sharing and/or safe harbor employer contributions up to 25% of compensation2

Dollar-for-dollar employer match up to 3% of compensation plus $0.50 for each dollar above 3% and up to 5% OR 3% non-elective contribution to all eligible employees

The total of salary deferral, discretionary and matching contributions cannot exceed the lesser of $52,000 or 100% of compensation for 2014

Eligibility Requirements3

Employment in one, two or three of the preceding five years

Employees must be at least age 21

Employees must have received up to $5,000 in compensation during any two preceding years and are expected to receive at least $5,000 during the current year One or two years of service for a set number of hours

If the employer requires two years of service, participants must be 100% vested in the plan at all times

Employees must be at least age 21

One year of service for a set number of hours

Employees must be at least age 21

Not applicable

One year of service for a set number of hours

Employees must be at least age 21

Plan Establishment/Contribution Deadline
Establishment of and contributions to the plan may be made until the employer's tax-filing deadline4 Plan must be established by October 1 of the tax year the plan is to be effective

Employer contributions may be made until employer's tax-filing deadline4

Employee salary deferrals must be deposited promptly5
Plan must be established by the last day of the fiscal year, usually December 31

Contributions may be made until the employer's tax-filing deadline4

Plan may be established at any point in the year but must be established by the payroll date the deferrals begin

Employee salary deferrals must be deposited promptly6

Discretionary and matching employer contributions may be made until the employer's tax-filing deadline4

Plan may be established at any point in the year but must be established by the payroll date that deferrals begin

Employee salary deferrals must be deposited promptly6

Discretionary contributions may be made until the employer's tax-filing deadline4

Plan must be effective at least three months during the first plan year

Employee salary deferrals must be deposited promptly6

Discretionary and safe harbor employer contributions may be made until the employer's tax-filing deadline4

Required Annual Paperwork
No annual paperwork Model Notification to Eligible Employees

Summary Description
IRS Form 5500

IRS Form 1099-R
IRS Form 5500

IRS Form 1099-R
IRS Form 55008

IRS Form 1099-R

IRS Form 5500

IRS Form 1099-R

401(k) Safe Harbor Plan Notice to Employees

Vesting Schedule
Participants are 100% vested at all times Participants are 100% vested at all times Participants may be 100% vested at all times, or the employer may select up to a three-year cliff or a six-year graded vesting schedule Employers may select up to a three-year cliff or a six-year graded vesting schedule on discretionary and matching employer contributions Not applicable

100% vesting required on safe harbor contributions and salary deferrals

Employers may select up to a three-year cliff or a six-year graded vesting schedule on discretionary contributions

Fees
Participants pay a $15 annual custodial fee per fund - fee is waived if total investments under the participant's Social Security number have a combined value of at least $10,000 Participants pay a $15 annual custodial fee per fund - fee is waived if total investments under the participant's Social Security number have a combined value of at least $10,000 An annual service fee of $25 per participant applies - the employer may choose to prepay the fee or deduct it from participants' accounts An annual service fee of $25 per participant applies - the employer may choose to prepay the fee or deduct it from participants' accounts An annual service fee of $25 applies - you may choose to prepay the fee or deduct it from your account An annual service fee of $25 per participant applies - the employer may choose to prepay the fee or deduct it from participants' accounts

1Contribution limits effective January 1, 2014.
2Contributions may be based only on the first $260,000 of compensation for 2014.
3Service and age requirements may be less restrictive at employer's discretion.
4Tax filing deadline plus any extensions.
5Employee salary deferrals must be deposited as soon as administratively feasible and no later than 30 days following the month in which the deferrals were made.
6Employee salary deferrals must be deposited as soon as administratively feasible and no later than 15 days following the month in which the deferrals were made.
7If you are self employed and do not report your compensation on IRS Form W-2, then your compensation is your earned income. Check with your tax advisor for information about how to determine your maximum contribution based on your earned income.
8IRS Form 5500 is generally not required for single-participant plans with $250,000 or less in assets.

Federal contribution limits are listed on this page. Some states and localities may have tax, community property or other laws that are different from the federal laws.

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 not intended as tax advice. Please consult your tax advisor for more detailed information or for advice regarding your individual situation.