## Your Guide to Retirement Plans
Looking to learn more about different plan types? This guide highlights common retirement plans along with key benefits and considerations of each — so you can make the best decision for your clients.

| PLAN BREAKDOWN | 401(K)1 | 403(B)2 | SIMPLE IRA | SEP IRA | CASH BALANCE & DEFINED BENEFIT |
| --- | --- | --- | --- | --- | --- |
| Who is this available to? | All businesses | Nonprofits, religious organizations, and certain public entities | Businesses with 100 or fewer employees | All businesses | All businesses |
| Which employees can participate?2 | Generally, employees age 21+ working at least 1 year for 1,000+ hours plus certain eligible part-time employees | Generally, employees are immediately eligible with a few exceptions | Employees earning $5,000+ for the past 2 years and current year | Employees age 21+ earning $750+ per year and employed for 3 of the past 5 years | Generally, employees age 21+ working at least 1 year for 1,000+ hours |
| How much can employees contribute in 2025?4 | 100% of pay up to $23,500 + $7,500 in catch-up if match 50+ individuals aged 60-63 can make additional catch-up contributions up to $11,250 | 100% of pay up to $23,500 + $7,500 in catch-up if age 50+ individuals aged 60-63 can make additional catch-up contributions up to $11,250 | Up to $16,000 + $5,500 in catch-up if age 50+ individuals aged 60-63 can make additional catch-up contributions up to $5,250^{a}$ | Employee contributions not available | Employee contributions typically not required; contributions dependent on plan design |
| Are employers required to contribute each year? | For non-safe harbor 401(k), contributions are optional; For safe harbor 401(k), contributions are required | Contributions optional | Contributions required | Contributions optional | Contributions required |
| If required, what are an employer's annual contribution options? | For safe harbor 401(k), an employer catch-up if match 100% of the first 3% and 50% of the next 2% of contributions, or offer a 3% contribution to everyone, even if they do not contribute | Contributions optional | Option 1: offer a 2% contribution to everyone, even if they do not contribute Option 2: 100% match of the first 3%; Employers may make an optional, additional contribution up to the lesser of 10% of compensation or $5,000^{b}$ | Contributions optional, but employers must contribute an equal percentage of pay for all employees | Determined annually based on plan design and benefit formula |
| What is the maximum employee + employer contribution amount allowed in 2025?4(Excludes catch-up) | 100% of employee pay up to $70,000 | 100% of employee pay up to $70,000 | If option 1, max $23,500. If option 2, max $27,000. With the optional, $5,000 contribution, option 1, max $28,500. If option 2, max $32,000 | 25% of employee pay up to $70,000 | Determined annually based on plan design; retirement benefit payout has limits |
| What are the vesting options? | For safe harbor 401(k), immediate 100% vesting required; For non-safe harbor 401(k), vesting options vary | Vesting options vary | Immediate 100% vesting required | Immediate 100% vesting required | Vesting options vary |
| Are loans and hardship withdrawals permitted? | Loans and hardship withdrawals are permitted, depending on employer's plan design choices | Loans and hardship withdrawals are permitted, depending on employer's plan design choices | Loans not permitted; withdrawals available | Loans not permitted; withdrawals available | Loans depend on employees' plan design; withdrawals generally not permitted |
| Are auto-enroll & auto-escalation available? | Yes, required for new plans starting 1/1/2025 onward | Yes, required for new plans starting 1/1/2025 onward | No | N/A | N/A |

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## Safe Harbor 401(k)
### Available to:
All businesses

### Benefits
- Bypasses certain compliance tests
- Employers can provide a generous employee benefit
- Great for employee attraction & retention
- Various options for plan design
- Vestwell handles annual IRS 5500 filing and any additional compliance testing
- Employer contributions are tax deductible up to IRS limits and employee contributions may reduce taxable income and grow tax-deferred
- Small businesses can receive tax credits that offset plan costs

### Considerations
- Employer contributions required
- QACA safe harbor plans are the only plan types that allow a vesting schedule
- Plans including 100+ participants with an account balance may be subject to an annual CPA audit

## Non-Safe Harbor 401(k)
### Available to:
All businesses

### Benefits
- Offered by Vestwell
- Great for employee attraction & retention
- Various options for plan design and vesting
- Employers can provide a generous employee benefit
- Vestwell handles annual IRS 5500 filing and compliance testing
- Employer contributions are tax deductible up to IRS limits and employee contributions may reduce taxable income and grow tax-deferred
- Small businesses can receive tax credits that offset plan costs

### Considerations
- Annual compliance testing is mandatory
- Plans including 100+ participants with an account balance may be subject to an annual CPA audit
- Contributions may be limited for highly compensated employees

## 403(b)
### Available to:
Nonprofits and certain public entities

### Benefits
- Offered by Vestwell
- Employees generally immediately eligible to participate
- Simplified compliance testing relative to a 401(k)
- Great for employee attraction & retention
- Employers can provide a generous employee benefit
- Vestwell handles annual filing and any compliance testing
- Employee contributions may reduce taxable income and grow tax-deferred

### Considerations
- Certain compliance tests may be required dependent on plan type
- Plans including 100+ participants with an account balance may be subject to an annual CPA audit
- 403(b) may have less name recognition for your employees than 401(k)

## Which plan is best for your clients' goals?

Vestwell is here to help. Thousands of employers trust Vestwell to power their savings programs. Contact us at sales@vestwell.com, and our team of retirement plan experts can help you find the plan type best suited for your clients.