How is this different from 401(k) contributions regarding payroll taxes?

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• How do employers save on payroll taxes?

  Since these are qualified employer contributions to a retirement plan, they are exempt from FICA, unemployment, and workers' compensation taxes. This saves employers approximately 7.65% plus unemployment and workers' comp rates.

• How do employees earn contributions?

  Contributions are 100% performance-based and tied to whatever performance standards the employer wants to establish safety goals, on time deliveries, customer satisfaction, attendance, productivity metrics, etc.

• Are there tax consequences for employees when they withdraw?

  Yes, withdrawals are subject to federal income tax and a 10% early distribution penalty if under age 59¬Ω, unless they qualify for penalty exemptions. However, withdrawals are not subject to FICA taxes and may not be subject to state and local taxes.

• What happens with plan-to-plan transfers?

  Transfers from the Radish Plan to a 401(k) or IRA are direct trustee-to-trustee transfers with no taxable event. There's no 1099 generated for plan-to-plan transfers.

• What happens to forfeitures if someone leaves?

  There are two components: The employer determines when contributions are actually made to the plan (vesting schedule). Once money goes into the plan, it's 100% vested. So the employer can set time requirements before contributions are made, but once ...