We serve for-profit and not-for-profit organizations of all sizes, as well as government organizations.
Your HUB Retirement Services professional can help structure any of the following plans:
Profit Sharing and 401(k)
A profit-sharing plan allocates a percentage of company profits to eligible employees. It requires a “plan document” establishing its term, a trust for plan assets to fund it, a record-keeping system for contributions and profit distributions, and a process for offering the plan to eligible employees. A 401(k) is a defined contribution plan in which participants establish a contribution up to IRS limits. Employers may match a percentage of employee contributions; 401(k) plans are valuable recruiting tools, but also impose added fiduciary obligations upon employers who must maintain them.
Employee Stock Ownership Plan (ESOP)
An ESOP is a retirement plan in which an employer contributes stock to benefit an employee. An employer can contribute stock to a trust it establishes and allocate shares based upon seniority. Or the employer can have the plan borrow money to buy stock and provide funds to repay the loan. ESOPs are considered excellent recruiting tools but are expensive to establish and may expose a company to damage claims.
A defined benefit retirement plan, often known as a pension plan, promises a specific monthly benefit upon retirement. These permit an employer to annually contribute (and therefore deduct) more than a defined contribution plan. On the risk side, they are complex to administer and expose employers to excise taxes for excess or inadequate contributions.
Non-qualified 409A Deferred Compensation
A non-qualified 409A deferred compensation retirement plan allows earned income to be deferred until the year after it is earned, thereby deferring income taxes. Employees must make an irrevocable election to defer income. Employers have flexibility when choosing to whom plans are offered because they are not governed by ERISA. Money paid into a plan cannot be deducted as wages or salary until the employee receives it.
A 403(b) is a retirement plan offered by public schools and certain 501(c)(3) organizations. Not subject to ERISA, a 403(b) provides greater flexibility and fewer reporting and fiduciary requirements. However, employers can have only ministerial participation and cannot select vendors or TPAs.
“Top hat” 457(b)
A 457(b) or Top Hat plan grants tax-advantaged treatment to certain non-qualified deferred compensation plans for government entities or an entity exempt from income tax under IRC Section 501(c). A Top Hat can only provide deferred compensation for highly compensated employees or groups of managers, executives, directors, or officers. A 457(b) is not subject to all of ERISA if handled properly, giving sponsors greater flexibility and fewer reporting and fiduciary requirements.
A Governmental 457(b) is a deferred compensation plan for state or local government entities or a tax-exempt organization. They are expressly authorized by the Internal Revenue Code, which provides a model form for implementation. Money paid into the plan cannot be deducted as wages or salary until the employee receives it, which is not the case with qualified plans.
*HUB Retirement and Private Wealth employees are Registered Representatives of and offer Securities and Advisory services through various Broker Dealers and Registered Investment Advisers, which may or may not be affiliated with HUB International. Insurance services are offered through HUB International, an affiliate.