Nondiscrimination and 401(k) Plans

Realizing 401(k) plan tax benefits requires that plans provide substantive benefits for rank-and-file employees, not only for business owners and managers. These requirements are referred to as nondiscrimination rules and cover the level of plan benefits for rank-and-file employees compared to owners/managers. Under a qualified retirement plan, contributions or benefits provided under the plan must not discriminate in favor of highly compensated employees.

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