Plan Feature Comparison Chart

■  What is the  
 maximum annual  
 contribution?
                 Choose
■  Which plans  
                  a Retirement Plan
 offer catch-up  
 contributions?

■  What are the  
                 ■  Including plans for employees of tax-
 minimum  
 employee         exempt and government entities (schools, 
 coverage  
 requirements?    hospitals, churches, charities)

■  When should  
                 ■  Highlights of eight types of retirement plans
 distributions  
 begin?

   ESTABLISHING A RETIREMENT PLAN

                                              that in the American 
   Experts estimate 
   workforce as a whole, workers will need 70 to 90% of their pre-retirement income 
   to maintain their current standard of living when they stop working. Lower income 
   earners may need more than 90%. Among these workers 25-64 years of age, a 
   little more than half are participants in an employer-sponsored retirement plan.

   Advantages of Having a Retirement Plan,

   By starting a retirement savings plan, you’ll help your employees save for the 
   future, and you’ll help secure your own retirement. Offering a retirement plan may 
   also help you attract and retain better qualified employees.

   Tax advantages have made it more appealing than ever to establish and contribute 
   to a retirement plan.
   Tax Advantages:
   ■ Contribution limits that allow employees and employers to contribute large 
     amounts to retirement plans.
   ■ Catch-up rules that allow employees age 50 and over to set aside additional 
     amounts.
   ■ In some plans, employees can invest a certain amount of their salary before it is 
     taxed.
   ■ A tax credit, known as the Retirement Savings Contributions Credit, is available 
     for eligible contributions to a retirement plan. This credit could reduce federal 
     income tax up to 50 cents on the dollar. 
   ■ Money in the retirement program grows tax-free.

   Choose a Retirement Plan,

   The most basic retirement plan is an Individual Retirement Arrangement (IRA). 
   Private-sector employers (for-profit and not-for-profit) and government employers 
   can offer savings plans that use IRAs to hold savings contributions.

   IRA-based plans include Payroll Deduction IRAs, Simplified Employee Pension 
   (SEP) plans and Savings Incentive Match Plan for Employees of Small Employers 
   (SIMPLE) IRA plans. In these plans, and also with 401(k), 403(b) and 457(b) plans, 
   the ultimate retirement benefits depend on the dollar amount accumulated in the 
   employee’s account.

2 2

   ESTABLISHING A RETIREMENT PLAN

   A defined benefit plan promises a specific benefit at retirement — $1,000 
   a month, for example. The amount of this benefit is often based on a set 
   percentage of pay multiplied by the number of years the employee worked for 
   the employer offering the plan.

   Retirement Plan Correction Programs

   The IRS has programs structured to provide financial incentives for finding 
   and correcting mistakes earlier rather than later. In fact, many mistakes can be 
   corrected easily, without penalty and without notifying the IRS.

   The IRS system of retirement plan correction programs, the Employee Plans 
   Compliance Resolution System (EPCRS), helps business owners protect 
   participant benefits and keep their plans within the law. EPCRS includes:

   Self-Correction Program — Find and correct a mistake before an examination.

   Voluntary Correction Program — Correct your plan’s mistakes with help from 
   the IRS.

   Audit Closing Agreement Program — If the IRS examines your plan and finds 
   an error, you can still correct the problem. However, the fee will be larger than if 
   you found and fixed the error yourself, or brought it in voluntarily.

3 3

   COMPARE RETIREMENT PLANS

Plan Feature Comparison Chart
Starting with the brief summary table below, find the plans that fit you and your employees best. 
Then click on the plan tabs to view and compare the details on each plan.

   Sponsor/                                                                                            Learn 
                                    Key Advantage                             Plans to Consider
   Eligible Employer                                                                                   More

   ■ Any employer                   ■ easy to set up and maintain             Payroll Deduction IRA    Page 5

   ■ Any employer                   ■ easy to set up and maintain             SEP                      Page 6

   ■ Employers with 100 or fewer    ■ salary reduction plan with little       SIMPLE IRA               Page 7
     employees that do not            administrative paperwork
     currently maintain another plan

   ■ Any non-government employer    ■ permits high level of salary deferrals  401(k)                   Page 8
   ■ Governments, only if plan was    by employees
     established prior to May 1986  ■ may include designated Roth program

   ■ Public education employers     ■ permits high level of salary deferrals  403(b)                   Page 9
   ■ 501(c)(3) organizations          by employees
                                    ■ may include designated Roth program

   ■ State and local governments    ■ permits high level of salary deferrals  457(b) Governmental      Page 10
                                      by employees
                                    ■ may include designated Roth program

   ■ Any tax-exempt organization    ■ permits high level of salary deferrals  457(b) Tax-Exempt        Page 11
                                      by employees                            Organization (Non-Church)

   ■ Any employer                   ■ provides a fixed, pre-established       Defined Benefit          Page 12
                                      benefit for employees

4 4

 Payroll Deduction IRA

 Sponsor/Eligible Employer, ■ any employer

 Key Advantage              ■ easy to set up and maintain

 Employer’s Role            ■ arrange for employees to make payroll deduction contributions
                            ■ transmit contributions for employees to IRA
                            ■ no annual filing requirement

 Contributors to the Plan   ■ employee can decide how much to contribute

 Maximum Annual             ■ employee: $6,000 for 2021
 Contribution  
 (per participant)

 Catch-Up Contributions     ■ age 50 or over — additional employee contribution — $1,000

 Minimum Employee           ■ should be made available to all employees
 Coverage Requirement

 Withdrawals, Loans         ■ withdrawals permitted any time subject to federal income taxes
 and Distributions          ■ subject to 10% additional tax if before age 59½
                            ■ must start receiving distributions by April 1 of the year following  
                              attainment of age 72 (70½ if you turned 70½ before January 1, 2020) 
                              (special rules apply to Roth IRAs)
                            ■ loans are not permitted from IRAs

 Rollovers/Transfers        ■ rollovers permitted from one IRA to another and to an eligible retirement plan  
                              (special rules apply to Roth IRAs)

 Vesting                    ■ contributions are immediately 100% vested

 EPCRS,                     ■ no

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 SEP

 Sponsor/Eligible Employer, ■ any employer

 Key Advantage              ■ easy to set up and maintain

 Employer’s Role            ■ set up plan—employer may use Form 5305-SEP
                            ■ transmit contributions for employees to SEP-IRA
                            ■ generally, no annual filing requirement
                            ■ bank or financial institution handles most of the paperwork

 Contributors to the Plan   ■ employer can decide whether to make contributions year-to-year
                            ■ only employer contributes

 Maximum Annual             ■ up to 25% of compensation but no more than $58,000 for 2021,
 Contribution  
 (per participant)

 Catch-Up Contributions     ■ N/A

 Minimum Employee           ■ must be offered to all employees who are at least 21 years of age, 
 Coverage Requirement         employed by the employer for 3 of the last 5 years, and had  
                              compensation of at least $650 in 2021

 Withdrawals, Loans         ■ withdrawals permitted any time subject to federal income taxes
 and Distributions          ■ subject to 10% additional tax if before age 59½
                            ■ must start receiving distributions by April 1 of the year following  
                              attainment of age 72 (70½ if you turned 70½ before January 1, 2020)
                            ■ loans are not permitted from SEP-IRAs

 Rollovers/Transfers        ■ rollovers permitted from one IRA to another and to an eligible retirement plan

 Vesting                    ■ contributions are immediately 100% vested

 EPCRS,                     ■ yes

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 SIMPLE IRA

 Sponsor/Eligible Employer, ■ employer with 100 or fewer employees that does not currently maintain another plan

 Key Advantage              ■ salary reduction plan with little administrative paperwork

 Employer’s Role            ■ set up plan—employer may use Form 5304-SIMPLE or Form 5305-SIMPLE
                            ■ transmit contributions for employees to SIMPLE IRA
                            ■ no annual filing requirement
                            ■ bank or financial institution handles most of the paperwork

 Contributors to the Plan   ■ employee can decide how much to contribute
                            ■ employer must make matching contributions or contribute 2% of each eligible 
                              employee’s compensation

 Maximum Annual             ■ employee:
 Contribution                 • $13,500 in 2021
 (per participant)          ■ employer:
                              • either match employee contributions 100% of first 3% of compensation 
                                (can be reduced to as low as 1% in any 2 of 5 years), or
                              • contribute 2% of each eligible employee’s compensation

 Catch-Up Contributions     ■ age 50 or over — additional employee contribution — $3,000 in 2021

 Minimum Employee           ■ must be offered to all employees who have compensation of at least $5,000 in any 
 Coverage Requirement         prior 2 years and are reasonably expected to earn at least $5,000 in the current year

 Withdrawals, Loans         ■ withdrawals permitted any time subject to federal income taxes
 and Distributions          ■ subject to 10% additional tax if before age 59½  
                              (25% if less than 2 years of participation)
                            ■ must start receiving distributions by April 1 of the year following  
                              attainment of age 72 (70½ if you turned 70½ before January 1, 2020)
                            ■ loans are not permitted from SIMPLE IRA plans

 Rollovers/Transfers        ■ rollovers permitted from one SIMPLE IRA to another SIMPLE IRA any time
                            ■ however, a rollover from a SIMPLE IRA to a non-SIMPLE IRA or to an eligible  
                              retirement plan can be made tax-free only after a 2-year participation in the  
                              SIMPLE IRA plan

 Vesting                    ■ employer and employee contributions are immediately 100% vested

 EPCRS,                     ■ yes

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 401(k)

 Sponsor/Eligible Employer, ■ any non-government employer
                            ■ governments, only if plan was established prior to May 1986

 Key Advantage              ■ permits high level of salary deferrals by employees
                            ■ may include designated Roth program

 Employer’s Role            ■ arrange for employees to make elective deferral contributions and  
                              transmit contributions
                            ■ annual filing of Form 5500 is required (unless government entity)
                            ■ may require annual nondiscrimination testing to ensure that plan does not  
                              discriminate in favor of highly compensated employees
                            ■ no model form to establish this plan

 Contributors to the Plan   ■ employee elective deferral contributions
                            ■ employer contributions are permissible but not required

 Maximum Annual             ■ employee elective deferrals:
 Contribution                 • $19,500 in 2021
 (per participant)          ■ employer and employee:
                              • lesser of $58,000 (2021) or 100% of compensation, subject to 
                                nondiscrimination testing

 Catch-Up Contributions     ■ age 50 or over — additional elective deferrals — $6,500 in 2021

 Minimum Employee           ■ must pass minimum coverage test
 Coverage Requirement

 Withdrawals, Loans         ■ withdrawals permitted after a distributable event occurs (such as retirement, 
 and Distributions            death, disability, severance from employment)
                            ■ must start receiving distributions by April 1 following the later of year of retirement 
                              or attainment of age 72 (70½ if you turned 70½ before January 1, 2020)
                            ■ plan may permit loans and hardship withdrawals
                            ■ subject to 10% additional tax if before age 59½

 Rollovers/Transfers        ■ rollovers permitted to an eligible retirement plan or IRA

 Vesting                    ■ employee elective deferral contributions are immediately 100% vested
                            ■ employer contributions may vest over time according to plan terms

 EPCRS,                     ■ yes

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 403(b)

 Sponsor/Eligible Employer, ■ public education employers
                            ■ 501(c)(3) organizations

 Key Advantage              ■ permits high level of salary deferrals by employees
                            ■ may include designated Roth program

 Employer’s Role            ■ arrange for employees to make elective deferral contributions and transmit 
                              contributions
                            ■ may require Form 5500 filing if employer contributions are made (unless 
                              government entity)
                            ■ no model form to establish this plan

 Contributors to the Plan   ■ employee elective deferral contributions
                            ■ employer contributions are permissible but not required

 Maximum Annual             ■ employee elective deferrals - $19,500 in 2021
 Contribution               ■ employer and employee — lesser of $58,000 (2021) or 100% of includible 
 (per participant)            compensation
                            ■ age 50 or over — additional elective deferrals — $6,500 (2021)

 Catch-Up Contributions     Special 403(b) catch-up:
                            ■ selected employers
                            ■ employee must have 15 years of service
                            ■ limited to least of: 1) $3,000, 2) $15,000 less previously excluded special  
                              catch-ups and 3) $5,000 multiplied by years of service minus previously  
                              excluded deferrals

 Minimum Employee           ■ employee elective deferral contributions:
 Coverage Requirement         • all eligible employees may elect to have a contribution of more than  
                              $200 by salary reduction
                            ■ other contributions:
                              • must pass minimum coverage test (except government entities)

 Withdrawals, Loans         ■ withdrawals permitted after a distributable event occurs (such as retirement, death,  
 and Distributions            disability, severance from employment)
                            ■ must start receiving distributions by April 1 following the later of year of retirement 
                              or attainment of age 72 (70½ if you turned 70½ before January 1, 2020)
                            ■ plan may permit loans and hardship withdrawals
                            ■ subject to 10% additional tax if before age 59½

 Rollovers/Transfers        ■ rollovers permitted to an eligible retirement plan
                            ■ transfers permitted from one 403(b) to another 403(b)
                            ■ purchase permissive service (government plans)

 Vesting                    ■ employee elective deferral contributions are immediately 100% vested
                            ■ employer contributions may vest over time according to plan terms

 EPCRS                      ■ yes

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  457(b) Governmental

  Sponsor/Eligible Employer, ■ state and local governments

  Key Advantage              ■ permits high level of salary deferrals by employees
                             ■ may include designated Roth program

  Employer’s Role            ■ arrange for employees to make salary reduction contributions
                             ■ no model form to establish this plan

  Contributors to the Plan   ■ employee salary reduction contributions
                             ■ employer contributions are permissible but not required

  Maximum Annual             ■ employer and employee:
  Contribution                 • $19,500 in 2021
  (per participant)          ■ age 50 or over — additional salary reduction contribution — $6,500 (2021)

  Catch-Up Contributions     Special 457 catch-up:
                             ■ 3 years prior to the year of normal retirement age
                             ■ limited to lesser of:
                               1. $39,000 (twice the basic annual limit) in 2021, or
                               2.  the basic annual limit plus unused basic annual limit in prior years  
                                  (only allowed if not using the age 50 or over catch-up)

  Minimum Employee           ■ common-law employees
  Coverage Requirement       ■ independent contractors
                             ■ does not need to pass a minimum coverage test

  Withdrawals, Loans         ■ withdrawals permitted after severance from employment
  and Distributions          ■ must start receiving distributions by April 1 following the later of year of retirement 
                               or attainment of age 72 (70½ if you turned 70½ before January 1, 2020)
                             ■ plan may permit loans and distributions for unforeseen emergency or small 
                               inactive accounts

  Rollovers/Transfers        ■ rollovers permitted to an eligible retirement plan
                             ■ transfers permitted from one government 457(b) to another government 457(b)
                             ■ purchase permissive service

  Vesting                    ■ employee salary reduction contributions are immediately 100% vested
                             ■ employer contributions may vest over time according to plan terms

  EPCRS,                     ■ submission accepted on a provisional basis outside EPCRS
                             ■ special 180-day rule to correct

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  457(b) Tax-Exempt Organization (Non-Church)

  Sponsor/Eligible Employer, ■ any tax-exempt organization

  Key Advantage              ■ permits high level of salary deferrals by employees

  Employer’s Role            ■ arrange for employees to make salary reduction contributions
                             ■ no model form to establish this plan

  Contributors to the Plan   ■ employee salary reduction contributions
                             ■ employer contributions are permissible but not required

  Maximum Annual             ■ employer and employee:
  Contribution                 • $19,500 in 2021
  (per participant)          ■ no age 50 or over additional salary reduction contribution

  Catch-Up Contributions     Special 457 catch-up:
                             ■ 3 years prior to the year of normal retirement age
                             ■ limited to lesser of:
                               1. $39,000 (twice the basic annual limit) in 2021, or
                               2.  the basic annual limit plus unused basic annual limit in prior years

  Minimum Employee           ■ selected group of management or highly compensated employees
  Coverage Requirement       ■ independent contractors
                             ■ does not need to pass a minimum coverage test

  Withdrawals, Loans         ■ withdrawals permitted after severance from employment
  and Distributions          ■ must start receiving distributions by April 1 following the later of year of retirement 
                               or attainment of age 72 (70½ if you turned 70½ before January 1, 2020)
                             ■ plan may not permit loans

  Rollovers/Transfers        ■ no rollovers permitted
                             ■ post-severance transfers permitted from one tax-exempt 457(b) to another  
                               tax-exempt 457(b)

  Vesting                    ■ employee and employer contributions must be subject to claims of creditors

  EPCRS,                     ■ no

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  Defined Benefit

  Sponsor/Eligible Employer, ■ any employer

  Key Advantage              ■ provides a fixed, pre-established benefit for employees

  Employer’s Role            ■ annual filing of Form 5500 required (unless government entity)
                             ■ an actuary must determine annual contributions
                             ■ no model form to establish this plan

  Contributors to the Plan   ■ primarily funded by employer

  Maximum Annual             ■ actuarially determined contribution
  Contribution               ■ plan benefits are subject to nondiscrimination testing
  (per participant)          ■ maximum annual benefit that may be funded is the lesser of $230,000 (2021) or 
                               100% of a participant’s average compensation for their highest 3 consecutive 
                               calendar years

  Catch-Up Contributions     ■ N/A

  Minimum Employee           ■ must pass minimum coverage test
  Coverage Requirement

  Withdrawals, Loans         ■ payment of benefits after a distributable event occurs (such as retirement, death, 
  and Distributions            disability, severance from employment)
                             ■ must start receiving distributions by April 1 following the later of year of retirement 
                               or attainment of age 72 (70½ if you turned 70½ before January 1, 2020)
                             ■ loans permitted
                             ■ subject to 10% additional tax if before age 59½

  Rollovers/Transfers        ■ generally, participant’s benefit can be rolled over to another qualified plan that 
                               accepts rollovers or an IRA

  Vesting                    ■ may vest over time according to plan terms

  EPCRS,                     ■ yes

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Retirement Plan 

Information Resources

Download the following publications at www.irs.gov/formspubs, or order a free copy 
through the IRS by calling 800-829-3676.

■ Publication 560, Retirement Plans for Small Business (SEP, SIMPLE, and Qualified Plans)

■ Publication 571, Tax-Sheltered Annuity Plans (403(b) Plans) For Employees of Public Schools 
  and Certain Tax-Exempt Organizations

■ Publication 575, Pension and Annuity Income

■ Publication 590-A, Contributions to Individual Retirement Arrangements (IRAs)

■ Publication 590-B, Distributions from Individual Retirement Arrangements (IRAs)

The following publications are only available online at www.irs.gov/formspubs:

■ Publication 963, Federal-State Reference Guide

■ Publication 4222, 401(k) Plans for Small Businesses

■ Publication 4224, Retirement Plan Correction Programs

■ Publication 4333, SEP Retirement Plans for Small Businesses

■ Publication 4334, SIMPLE IRA Plans for Small Businesses

■ Publication 4587, Payroll Deduction IRAs for Small Businesses

■ Publication 4674, Automatic Enrollment 401(k) Plans for Small Businesses

■ Publication 4806, Profit Sharing Plans for Small Businesses

For assistance or information on retirement plans, see:

■ Choosing a retirement plan at www.irs.gov/retirement

Tax Exempt and Government Entities 
Customer Account Services 
877-829-5500

Publication 4484 (Rev. 4-2021)  Catalog Number 47282U  Department of the Treasury  Internal Revenue Service  www.irs.gov