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.
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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 ...
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 is this different from 401(k) contributions regarding payroll taxes?
Employee contributions to 401(k) plans became subject to FICA taxes (probably in the 1986 Reconciliation Act). However, qualified employer contributions like those in the Radish Plan remain exempt from FICA taxes.
At what point can money be transferred for investment growth?
The employer can set the threshold amount at which money can be transferred to other plans for investment growth. This allows employees who accumulate significant amounts to move money for longer term retirement planning.