TrendCepts International, Inc.

401(k) Plans

Employees can make contributions in the form of pre-tax salary deferrals (subject to limits). This means that designated amounts or percentages are withheld (or deferred) from paychecks before taxes. These salary deferral contributions (also popularly known as “401(k)” contributions) are then deposited into a tax free trust for investment.
Taxes are not due on the contributions or earnings until distributed from the trust.
A Roth 401(k) feature can be added that allows for after-tax salary deferrals (please see ‘Roth 401(k)’ in the ‘What’s New’ section for more information on this feature).
Matching contributions can be made by the employer that matches a certain percentage or dollar amount of the employees’ salary deferrals.
Discretionary profit sharing contributions can be made up to 25% of eligible payroll subject to certain over-lapping dollar limits.
Discrimination testing methods are available that can help owners and highly compensated employees to maximize their contributions.
Special ‘Safe Harbor’ contributions can be declared before the beginning of each year to eliminate the need for discrimination testing of salary deferrals or employer matching contributions.
Participants vest in (own) their plan account balances based on their years of service and the vesting schedule under the plan. (Employee contributions are always fully vested.)
Employees may be required to satisfy an age and/or service requirement in order to participate in the plan.
Eligibility requirements can be different for salary deferrals and profit sharing contributions (subject to a maximum service requirement for 401(k) contributions of one year of service).
Once in the plan, employees can be required to meet ongoing service requirements in order to receive profit sharing contributions.
Loans, hardship withdrawals and in-service withdrawals may be allowed (subject to restrictions).
Required Minimum Distributions starting at age 70½. Some plans defer this distribution until actual retirement for non-5% owners.

Profit Sharing Plan

Discretionary profit sharing contributions can be made up to 25% of eligible payroll subject to certain over-lapping dollar limits.
The amount of the employer contribution can vary annually and range from 0% to 25% of pay, but is expected to be “substantial and recurring” over the life of the plan.
Plan design allows for a variety of allocation methods of the contribution to employee accounts.
Contributions are deposited into a tax-free trust for investment.
Taxes are not due on the contributions or earnings until distributed from the trust.
Participants vest in (own) their plan account balances based on their years of service and the vesting schedule under the plan.
Employees must generally satisfy an age and/or service requirement in order to participate in the plan.
Participants may be required to complete a minimum number of hours of service and/or be required to be employed on the last day of the plan year to receive a share of the contribution and forfeiture allocations.
Loans and in-service withdrawals may be allowed (subject to restrictions).
Required Minimum Distributions starting at age 70½. Some plans defer this distribution until actual retirement for non-5% owners.

Money Purchase Pension Plan

There is a mandatory employer contribution that is stated in the plan document.
Contributions are allocated based on a formula in the plan document.
Contributions are deposited into a tax-free trust for investment.
Taxes are not due on the contributions or earnings until distributed from the trust.
Participants vest in (own) their plan account balances based on their years of service and the vesting schedule under the plan.
Employees must generally satisfy an age and service requirement in order to participate in the plan.
Participants may be required to complete a minimum number of hours of service and/or be required to be employed on the last day of the plan year to receive a share of the contribution and forfeiture allocations.
No in-service withdrawals may be allowed prior to normal retirement age.
Loans may be allowed (subject to restrictions).
Required Minimum Distributions starting at age 70½. Some plans defer this distribution until actual retirement for non-5% owners.

Employee Stock Ownership Plans (ESOP)

This type of plan is designed to invest primarily in employer stock.
Available to S and C Corporations.
Exempt from some of the prohibited transaction and fiduciary rules otherwise imposed by ERISA.
Participants must be given certain voting rights
In a non-leveraged ESOP, Employer contributions are discretionary each year.
Leveraged ESOPs acquire employer stock with borrowed funds. The stock is held in suspense and released as the loan is paid off. Released shares are allocated to eligible participants.
A non-stock or cash contribution can also be made and would generally fall under the profit sharing rules.
ESOP contributions must be allocated on a pro-rata basis based on eligible plan compensation and other plan criteria.
Participants vest in (own) their plan account balances based on their years of service and the vesting schedule under the plan.
Employees must generally satisfy an age and service requirement in order to participate in the plan.
Once in the plan, employees can be required to meet ongoing service requirements in order to receive contributions.
Required Minimum Distributions starting at age 70½. Some plans defer this distribution until actual retirement for non-5% owners.

403(b) Plans

Available only to 501(c)(3) or Not-For-Profit employers.
Employees can make contributions in the form of pre-tax salary deferrals (subject to limits). This means that a designated amount or percentage is withheld (or deferred) from their paycheck before taxes. This amount is then deposited into the plan.
Discretionary employer contributions can also be made up to 25% of eligible payroll subject to certain over-lapping dollar limits.
Employer contributions are generally fully vested when made, but a vesting schedule can be used with this plan subject to certain 415 limitations that differ from ordinary profit sharing plans.
Unlike a 401(k) plan, every eligible employee must be offered the chance to contribute pre-tax salary deferrals (also called universal availability) upon date of hire (no service requirements).
Once in the plan, employees can be required to meet ongoing service requirements in order to receive employer contributions.
Loans, hardship withdrawals and in-service withdrawals may be allowed (subject to restrictions).
New regulations are expected to be finalized in 2007 that will change administrative procedures.
Required Minimum Distributions starting at age 70½. Some plans defer this distribution until actual retirement for non-5% owners.