Defined contribution (401(k)) and nonqualified deferred compensation plans

Defined contribution (401(k))

As an employer, you play a pivotal role in supporting your employees and their financial wellness. For many employees, a 401(k) plan (or defined contribution plan) is one of their most critical retirement vehicles. We're here to help provide you with potential solutions for retirement-readiness, while helping to build financial confidence for your workforce. With core capabilities including employee education and communications, relationship management and fiduciary advisory services, we can support you in building a strong plan aligned with the goals of your organization.

 

Our defined contribution (DC) offering emphasizes:

 

  • Deep financial wellness support
  • Flexible service and investment options
  • Investment guidance and advice programs
  • Open architecture
  • Fiduciary Advisory Services
  • Robust employee communications
  • Powerful tools and features
 

Nonqualified deferred compensation

As one of the few providers in the market offering access to a comprehensive array of retirement, benefits and financial services, Bank of America understands the role of deferred compensation: not as a stand-alone program, but as part of an integrated, comprehensive compensation and benefits package.

 

A nonqualified deferred compensation (NQDC) plan gives your key employees the ability to defer receiving a certain amount of compensation until a point in the future, with potential benefits. We help your top talent make the most of this opportunity with dedicated support from a team with a deep understanding of these types of arrangements and the value they play within an overall financial strategy.

 

We provide NQDC plan services designed to help organizations and their top-level employees get the most from their benefits:

 

  • Manage their tax liability by making tax deferred contributions and scheduling distributions
  • Work to close the retirement savings gaps caused by contribution limits on their 401(k) account
  • Plan for short- and long-term goals

 

Our complimentary solutions include:

 

  • Recordkeeping platform designed to support IRC Section 409A
  • Strategies for financing and investing
  • Rabbi trust services to help safeguard funds1

 

Frequently asked questions

Does Bank of America offer small business owners 401(k) plans?

Yes, Bank of America offers several retirement plans for small businesses, such as a SIMPLE IRA, a SEP IRA, and a traditional 401(k). For small businesses (less than 10 employees), our advisors may suggest a SIMPLE IRA or an Individual 401(k) for self-employed individuals. A traditional 401(k) or SEP IRA may be more appropriate for those in a larger workplace.

What retirement plans are available to sole proprietors?

SoloK, SEP and Cash Balance are all options for a retirement plan for self-employed. A SoloK plan is meant for employers who do not have any employees other than themselves and a spouse, if applicable. This plan operates similarly to a traditional 401(k) plan, and allows contributions both as an employer and employee. With a SEP, or Simplified Employee Pension, employers can contribute to their own retirement savings as well as to their employees’. They are required to contribute equally to all eligible employees. With a Cash Balance plan, employers have more control over investments and costs. The employer is able to contribute a specific percentage of each individual employee’s annual compensation with a guaranteed rate of return.

What are the advantages of setting up a 401(k) plan?

When it comes to retirement plans, employees are often the subject of focus, so you may wonder, “How does a 401(k) benefit the employer?” Thankfully, both parties can experience the advantages of a 401(k) plan. Employers can attract and retain employees, which can help the organization grow while creating a competitive advantage. Businesses can also receive tax benefits and deductions for their contributions. So, while employees can enjoy the savings, there are plenty of 401(k) benefits for employers to experience, too.

What are the tax credits for starting a new retirement plan?

New retirement plan tax credits can vary due to a variety of factors including business size and updates on laws and regulations. However, there are two main tax credits to consider for retirement plans for sole proprietors. First is the plan startup costs credit which is for costs to arrange and administer the plan, and to educate employees about it. This covers up to $500 per year for the first three years of the plan. Second is the auto-enroll credit which gives businesses a $500 per year credit for the first three years of the retirement plan when they choose auto-enrollment.

How do I best manage my fiduciary risk with my 401(k) and pension plan?

Offering retirement plans as a small business is bound to come with risks. That said, you can better manage your 401(k) fiduciary risk by partnering with qualified professionals who can find the right plan that meets your business capabilities. At Bank of America, we offer flexible service, investment options, and Fiduciary Advisory Services to support your goals.

Get in touch today

Eileen Pickard

Managing Director

Workplace Benefits Sales

609.274.6265

eileen.pickard@bofa.com

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1Refers to change of heart or management takeover, does not refer to assets.