According to a news release, the bank’s Eureka Advantage Plus Individual (k) plan will be available September 15 at the bank’s nearly 300 offices in six western states.
Developed by subsidiary Eureka Investment Advisors, the plan enables small business owners to take advantage of significantly greater tax-sheltered contributions than other traditional options such as SEP and SIMPLE IRA plans, according to the announcement.
New rules from the Economic Growth and Tax Reconciliation Act of 2001 took effect in January 2002 and have allowed small business owners to contribute more to an Individual (k) plan than any other kind of defined-contribution retirement arrangement.
According to the bank, the Individual (k) plan’s advantages include:
- Higher Contribution Limits – The total contribution limit for a Eureka Advantage Plus plan is the lesser of 100% of compensation or $40,000 ($42,000 for individuals age 50 or older). Also, up to 25% of the company’s contribution may be deductible.
- Access to tax-free Loans – Unlike IRA-based business retirement plans, federal law permits participants to take loans from their Eureka Advantage Plus Individual (k).
- Cost Effectiveness – The plans are not subject to most of the costly testing requirements that generally apply to traditional 401 (k) plans.