SEPs
		SIMPLEs
		Qualified (Keogh) plans
		Contribution limits
		Contribution requirements
		Defined-contribution plans
		Defined-benefit plans
		Funding plans with stock

Some small-business retirement plans may require employers to make minimum contributions, either to fund a new plan or as part of regular payments.

The following list summarizes contribution requirements that may exist for each type of retirement plan:

• SEP-IRAs. You are not required to make contributions every year to a SEP plan. However, if you do contribute, your contributions must not discriminate in favor of highly compensated employees. You must also contribute using a written formula that makes equitable allocations to the SEP-IRAs of eligible employees.
  
  
• SIMPLEs. SIMPLE plans are considered defined-contribution plans. (Contributions that employees make to their own accounts are called elective deferrals.) SIMPLE plans require you to contribute either matching or non-elective contributions.
  
  
  • Matching contributions. If an eligible employee makes elective deferrals and you make matching contributions, you are generally required to match, dollar for dollar, up to 3% of each contributing employee's compensation. The mandatory minimum matching amount is 1% of employee compensation. However, you must notify employees in advance if you decide to contribute less than 3%. Additionally, any matching amounts below 3% are not allowed for more than two years of the five-year period that ends with this decision.
    
    
  • Non-elective contributions. Instead of matching employee contributions, you may make non-elective contributions. Non-elective contributions are equal to 2% of compensation for each eligible employee. An eligible employee is one who earned at least $5,000 during any two previous years and is expected to earn at least that much in the current year.
    
    With non-elective contributions, you are required to contribute whether the employee contributes to his or her account or not. (With matching contributions, you are only required to contribute if the employee contributes.) The limit on employee compensation for purposes of calculating contributions for 2007 is $225,000.
    
    
  These contribution requirements apply to either a SIMPLE-IRA or SIMPLE 401(k) plan. You must make matching or non-elective contributions by the due date (including extensions) of your federal income tax return for the current year. For additional information, see IRS Pub. 560.
• Qualified defined-contribution plans. Qualified plans include money-purchase pension and profit-sharing plans. A money-purchase pension plan requires you to make fixed contributions, regardless of profits. Money-purchase plans require a minimum funding contribution. You should refer to section 412 of the U.S. tax code to help you calculate minimum funding requirements.
  
  A profit-sharing plan requires that any contributions are equitable and, if not based on a formula, that they are systematic and substantial. Despite its name to the contrary, a profit-sharing plan does not require that your contributions be funded from net profits. You generally have more flexibility in how much you contribute to a profit-sharing plan. However, your deductions are also likely to be lower than with a defined-benefit plan.
  
  
• Qualified defined-benefit plans. Defined-benefit plans are funded entirely by employer contributions. You should obtain professional actuarial advice to determine the level of benefits you want to provide employees. Qualified defined-benefit plans require you to make a minimum funding contribution, as well as quarterly payments to keep on track with these funding requirements. You should refer to section 412 of the U.S. tax code to help you calculate minimum funding requirements.
  
  Generally, you can contribute to a defined-benefit plan amounts up to the lesser of a future benefit amount of $180,000 (in 2007) or 100% of the employee's average taxable compensation for the consecutive three-year period that includes his or her highest earnings.
  
  
• Traditional 401(k) plans. You may be eligible to use a traditional 401(k) plan with certain qualified plans. A traditional 401(k) plan is the most widely used defined-contribution retirement plan in the U.S. Employers are not obligated to make matching contributions to 401(k)s.