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Profit Sharing and Money Purchase Plans

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General Description Flexible plans with various contribution options designed to reward long-term employees with tax-deferred growth — including an optional loan provision.

Wells Fargo offers a wide range of plans so you can get the retirement plan services you need for your business.

A money purchase plan has a fixed contribution requirement that your business chooses when your plan is started. Your business must then make that same contribution percentage each year regardless of your company's profits.

In contrast, a profit sharing plan offers more flexibility in determining annual contribution amounts. You decide how much you want to contribute each year — you can even skip years if you need to.
Eligibility to Contribute
  • Companies of any size can offer this plan.
Maximum Annual Contribution
  • Employer: Up to 25% of compensation or $52,000 in 2014.
    • Profit sharing plans allow you to vary the contribution rate each year.
    • A money purchase plan has a fixed contribution requirement that your business chooses when your plan is started. This contribution is required each year.
Tax-Deductible ContributionsEmployers can deduct contributions from federal taxable income.
Taxation of Earnings and WithdrawalsContributions and earnings are taxed as ordinary income when withdrawn.
Types of InvestmentsStocks, bonds and mutual funds available through a Wells Fargo Advisors brokerage account.
Withdrawal Penalties 10% IRS early withdrawal penalty if withdrawn before age 59 ½ unless exception applies.

Exceptions:
  • Normal retirement age
  • Separation of service after five years and reaching age 55
  • Death
  • Disability
  • Substantial equal periodic payments over life expectancy
  • Rollover to an IRA
  • Qualified military reservist
Required WithdrawalsMust begin at age 70 ½.
Deadline to Set Up and Fund
  • Plan must be established by the last day of the business’ fiscal year.
  • Profit Sharing contributions may be made up through the business tax filing date (plus extensions).
  • Money Purchase plan contribution may be made up to the business tax filing date (plus extensions) but no later than 8 ½ months after the plan year end.
Commissions and FeesVaries by account and investments.
Learn more about saving for retirement; contact a Wells Fargo financial professional today!
Call1-877-493-4727
 
Investment and Insurance Products: Are Not insured by the FDIC or any other federal government agency - Are Not deposits of or guaranteed by the Bank or any Bank Affiliate - May Lose Value
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Financial Advisors are registered representatives of Wells Fargo Advisors LLC, member SIPC, a non-bank affiliate of Wells Fargo & Company.
Wells Fargo Advisors, LLC (Member SIPC) does not provide tax or legal advice. Please see your tax and legal advisors to determine how this information may apply to your own situation.
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