Frequently Asked Questions

Employer contributions are deductible by the business. Participant pre-tax contributions and earnings aren’t taxed until they’re withdrawn. For more information, read the Merrill guide to tax benefits (PDF).

• Employers may match employee salary deferrals^adatext
• Employers may make a profit-sharing contribution for each eligible employee of up to the lesser of 25% of compensation or $58,000 for 2021 ($57,000 for 2020)^adatext
• The maximum compensation on which contributions can be based is $290,000 for 2021 ($285,000 for 2020)^adatext

• Employees may contribute up to $19,500 ($26,000 for those age 50 and older)
• The maximum combined employer and employee contribution is the lesser of 100% of compensation or $58,000 for 2021 (for those age 50 and older, $64,500) per participating employee

You can make contributions as an employee, through salary deferrals and also as an employer, through contributions made by your business. As an employee, you can contribute up to $19,500 for 2021 ($26,000 for those age 50 and older). The employer contribution may not exceed 25% of the employee’s compensation (20% of self-employed net earnings). The maximum total contribution is $58,000 for 2021 ($57,000 for 2020), which includes the employee and employer contributions.^adatext

Employer contributions and plan expenses are generally tax deductible for the business. Pre-tax salary contributions and any earnings are not taxed until withdrawn, and Roth (post-tax) contributions may be withdrawn tax free after age 59½.

Yes. Loans and withdrawals are available if you choose these features in your plan, though you may incur tax penalties and/or fees. For more information, read Merrill’s “Know the facts about loans and withdrawals” (PDF).^adatext

Employer contributions are limited to the lesser of $58,000 for 2021 ($57,000 for 2020) or 25% of eligible compensation (20% of self-employed net earnings).^adatext

Contributions are made only by you as the employer.

Yes. You can consolidate your retirement assets by rolling over 401(k), 403(b) and 457 accounts into a SEP IRA. You can also roll over a SIMPLE IRA after you have participated in the account for 2 years.

A Rollover IRA isn't right for everyone. Consider all of your choices and learn if a rollover may be right for you. For additional information, call 888.637.3343 to speak with a Merrill rollover specialist, 24/7.^†

^† You have choices about what to do with your employer-sponsored retirement plan accounts. Depending on your financial circumstances, needs and goals, you may choose to roll over to an IRA or convert to a Roth IRA, roll over an employer-sponsored plan from your old job to your new employer, take a distribution, or leave the account where it is. Each choice may offer different investment options and services, fees and expenses, withdrawal options, required minimum distributions, tax treatment, and different types of protection from creditors and legal judgments. These are complex choices and should be considered with care. Forn more information on rolling over your IRA 401(k), 403(b) or SEP IRA, visit our rollover page or call a Merrill rollover specialist at 888.637.3343.

You can choose to contribute a flat 2% of compensation for each eligible employee regardless of participation, or a dollar-for-dollar match of employee salary-deferral contributions capped at 3% of compensation. If needed, the cap may be reduced as low as 1% for any 2 years during a 5-year period.^adatext

Employees, including business owners, can defer up to $13,500 for 2021 ($16,500 for those age 50 or older) of compensation annually.^adatext

Any employee who received $5,000 or more in compensation in any 2 calendar years and is reasonably expected to earn $5,000 or more in the current year.