Small Business Retirement Plans > Small Business 401(k)

Tax breaks for you and your business at a price that fits your budget

Get tax breaks for your business while you pursue the retirement you've earned with our simplified and affordable 401(k).
A 401(k) offers:
  • An opportunity for tax deductions and credits
  • The ability to attract and retain talented employees
  • Convenient pre-tax salary deferrals and/or after-tax Roth feature
  • Access to your money through loans and/or withdrawals
Tab One

Good for you, good for your business

Enjoy streamlined features and bundled services designed for simplified plan administration, plus the potential for significant tax benefits that may offset the cost of your plan.

Save on taxes

  • Employer contributions and plan expenses are generally deductible by your business
  • Your business may be eligible for a $500 tax credit for each of the first three years if this is your first 401(k) plan and you have 100 or fewer employees
  • You and your employees can contribute up to $18,000 annually—over three times the limit of an IRA
Other tax benefits may apply. See our Tax Benefits fact sheet (PDF).
Open and set up your 401(k) plan online in minutes

Easy to start, convenient to use

  • Open and set up your 401(k) plan online in about 30 minutes or less, with help from a specialist if you want it
  • The simple, secure online platform lets you quickly check on your plan 24/7

Learn more about 401(k)s:

Frequently asked questions

What type of business can set up a 401(k)?

Corporations, partnerships, self-employed individuals, sole proprietorships, and non-profit organizations can establish a Merrill Edge Small Business 401(k) (if you're self-employed, you may want to consider a Merrill Edge Small Business Individual 401(k).

What are the potential tax benefits of a 401(k)?

A 401(k) offers the potential for significant tax advantages for you as the business owner as well as an employee. Employer contributions are deductible from the company's income; pre-tax contributions and any earnings aren't taxed until they're withdrawn. For more information, read the guide to tax benefits (PDF).

How much can employers contribute annually?1

  • Employers may match employee salary deferrals (for example, 100% matching percentage up to the first 4% employees contribute)
  • The maximum amount of employer/employee combined contributions is the lesser of 100% of compensation or $53,000 per participating employee in 2016
  • The maximum compensation on which contributions can be based is $265,000 in 2016

How much can employees contribute annually?1

  • Employees may contribute up to $18,000 annually, while those age 50 and older may contribute up to $24,000 with a catch-up contribution (an employer can have an individual account and contribute as an employee)
  • Combined total contributions for each individual account (employee contributions and any employer contributions) are $53,000 ($59,000 with a catch-up contribution for age 50 and older) or 100% of compensation, whichever is less

What are the benefits of the Roth feature in my 401(k) plan?

All employees eligible to contribute to the 401(k) may contribute to the Roth regardless of their income, which means the Roth contribution in the 401(k) is not limited by the compensation cap of a Roth IRA. The difference between pre-tax contributions and Roth (after-tax) contributions is when you pay taxes: The advantages of the Roth feature will vary based on your tax situation and whether you'll be better off paying taxes on the money now or later:
  • With pre-tax contributions you get a tax break now and reduce your current income tax bill; any earnings grow tax-deferred until withdrawn in retirement when you may be in a lower tax rate
  • With Roth (after-tax) contributions, you make your contribution with after-tax dollars—you won't reduce your current income taxes, but the future withdrawal of both contributions and earnings are tax-free (unless you withdraw prior to age 59 ½, which means you would be subject to a 10% early withdrawal penalty)
Your plan can be pre-tax, after-tax or both, and you can adjust your mix as your tax situation changes.

Does my business have to contribute to employee accounts?

Not necessarily; you can control this with your plan design. Some plans don't require employer contributions, while others, such as a Safe Harbor plan, do require them.

What is a Safe Harbor plan?

Safe Harbor plans are so named because they automatically satisfy certain plan requirements. The tests are designed to assure that your 401(k) plan is fair not just for owners and other highly-compensated employees, but for all company employees. Without such a "safe harbor," restrictions on the amount of employee contributions that top-tier employees and owners can contribute to their 401(k) plans are put in place. With a Safe Harbor plan, you are required to make an employer contribution to your employees, but you have some flexibility about how you make those contributions. For more information, read the guide to safe harbor plans (PDF).

Why start saving for retirement now?

Investing a smaller dollar amount over a longer period of time can have a greater impact on investment results than investing a higher dollar amount for a shorter period.
The importance of investing early
This chart shows the dollar values at age 65 for a 25-year-old investing $75 a month and a 35-year-old investing $100 a month, earning a hypothetical rate of return as indicated on the chart. By starting to save earlier, the 25-year-old was able to accumulate more at age 65 despite investing less each period.
Starting early may help results, even investing a small amount
Source: ChartSource, Wealth Management Systems, Inc, 2016. This example is hypothetical and does not represent the performance of a particular investment. Your results will vary. Actual investing includes fees and other expenses that may result in lower returns than this hypothetical example.
Hypothetical results are not meant to represent the past or future performance of any specific investment vehicle. Investment return and principal value will fluctuate and when redeemed the investments may be worth more or less than their original cost. An account may earn more, may earn less, or may incur a loss. Final account balances are prior to any distributions, fees, and taxes which would lower the ending balance. Taxes may be due upon distribution. You may be subject to a 10% additional federal tax if you withdraw prior to age 59 ½.

How will I know what investments to select in my company's 401(k) plan?

Morningstar Investment Management, LLC, a registered investment advisor and fiduciary (which means it has legal and ethical responsibility for managing the assets of an individual or a group), selects the investments and model portfolios for the Merrill Edge Small Business 401(k).2 This helps you manage some of your plan fiduciary obligations so you can stay focused on running your business. Learn more about the role of a fiduciary (PDF).

What guidance is available for my employees when selecting investments?

We offer investment guidance in a number of ways: Your employees may choose from the individual investments from the plan's menu or from portfolio models that reflect different levels of investing risk tolerance. We also provide online tools and resources to help them better understand investment basics, strategies and lifestage financial needs. And a PAi consultant is available to talk through any questions an employee may have.2

What if my employees or I have a question about investment choices?

The plan administrator, Plan Administrators, Inc. (PAi), offers educational support through their call center. There is also a suite of educational resources available on the plan's website.2

Can participants withdraw funds from their 401(k) accounts?

Yes, loans and withdrawals are available if you choose these features in your plan design. There are a few options, although most come with additional tax penalties and fees.
Loans: You may take a loan out against your 401(k) account. Loans must be repaid within five years from the date of the loan unless the loan is used to acquire a primary residence.
Hardship or early withdrawals: Certain situations qualify for a hardship withdrawal and only if all available loans have been taken and other sources of income have been exhausted. These situations include:
  • Unreimbursed medical expenses for you, your spouse, or your children
  • Prevent eviction from principal residence due to unpaid mortgage bills or bankruptcy
  • Purchase of primary residence
  • Burial or funeral expenses for deceased parent, spouse or your children
  • College tuition/higher education for you, your spouse, or your children
  • Repair damage to principal residence that would qualify for casualty deduction
Salary deferral contributions to 401(k) accounts will be suspended for 6 months after the receipt of the hardship distribution. Withdrawals taken prior to age 59½ are subject not only to regular income tax, but also to an additional 10% federal income tax unless due to death, disability, separation from service and receiving substantially equal periodic payments, or separating from service after age 55.

I have a 401(k) plan—how do I convert to a Merrill Edge Small Business 401(k)?

A consultant from Plan Administrators, Inc. (PAi) will walk you through the steps to complete the plan transfer, and will provide sample communications you can use at various stages.2 The steps include:
  • Providing PAi with existing plan docs (agreement, testing, filings), employee vesting status
  • Developing new plan agreement
  • Communications to current provider to close plan, and employee notices
  • Transfer assets and outstanding loans

How long does a conversion take?

Generally, a conversion or transfer from another provider takes up to 4-8 weeks, but will vary based on the ability for current provider to transfer records and assets. A consultant from Plan Administrators, Inc. (PAi) will guide you through this process.2

Tab Two
With the affordable Merrill Edge Small Business 401(k), you're in control. You can set up your plan online in about 30 minutes or less, with help from a specialist if you want it.

Why choose Merrill Edge for your Small Business 401(k) plan?

  • Minimal plan administration lets you stay focused on what's important: running your business
  • Funds and portfolios selected and managed by industry leader Morningstar Investment Management LLC take the guesswork out of investing2
  • Educational and recordkeeping support from award-winning Plan Administrators, Inc. (PAi)2
  • Check in on your plan with 24/7 online access
It's easier than you think
See how easy it is to set up and use a Merrill Edge Small Business 401(k) plan.
Looking for investment advice?
Pursue your financial goals and guidance from a licensed Merrill Edge Financial Solutions Advisor™—and ask about getting your own Merrill Edge Roadmap® to help you make a plan and stay on track.
Tab Three

Setting up a Small Business 401(k) is quick and easy:

1

Answer a few questions

Take a couple of minutes to answer a few questions and we'll customize a plan to fit your needs.
2

Review your proposal

You can modify the features if you wish during the setup process.
3

Purchase your plan

After reviewing your proposal you can purchase your plan online in just a few minutes.
4

Set up your plan

Set up your plan in as little as 30 minutes with step-by-step guidance. Help is available if you want it.
Need help or have questions? Contact a consultant from Plan Administrators, Inc. (PAi)2 at
866.890.4177 Mon-Fri 8 a.m.-5 p.m. CT.
Questions?
Call 855.667.9451 Mon.-Fri. 8 a.m. to 8 p.m. to speak with a member of our Small Business Financial Solutions Advisors™ team.
Tab four

Pricing and Fees

You may save money by converting to a Merrill Edge Small Business 401(k). Compare your current 401(k) plan pricing (PDF).
New plan costs3
Number of employees 14 2-10 11-25 26-50 51-100 101+
One-time set-up $100 $390 $390 $390 $390 $390
Ongoing monthly administration $20-$255 $70 $85 $115 $135 $160
Move a plan to Merrill Edge
Number of employees 14 2-10 11-25 26-50 51-100 101+
One-time set-up $150 $1,390 $1,390 $1,390 $1,390 $1,390
Ongoing monthly administration $20-$255 $70 $85 $115 $135 $160
Costs for employees participating in the plan6
Asset-based costs of account balance annually7
Investment fiduciary8 0.07%
Participant servicing fee9 0.20%
Account servicing fee10 0.25%
Asset-based costs per participant monthly
Recordkeeping fees11 $3
Fees example:
If John has been participating in the plan all year and has an ending account balance of $10,000 in his company's small business 401(k) plan, John will pay $36 ($3 x 12 months) in administration fees and $52 (0.52% of $10,000) in service fees that year.
Looking for investment advice?
Pursue your financial goals and guidance from a licensed Merrill Edge Financial Solutions Advisor™—and ask about getting your own Merrill Edge Roadmap® to help you make a plan and stay on track.
Customize a Small Business 401(k) plan
Take two minutes to answer a few questions and we'll help you customize a plan for your business.
Need help?
Call 866.890.4177
Contact a PAi 401(k) consultant2
Mon-Fri 8 a.m. – 5 p.m. CT
Already have an account?
Access it now at
401k.merrilledge.com.
Resources
See how simple it is to set up and maintain a Merrill Edge 401(k) plan.
Already have a 401(k) plan?
1 Contribution limits are subject to a cost-of-living adjustment annually pursuant to the Internal Revenue Code. Contribution limits for subsequent years may vary.

2 Plan administrative and recordkeeping services for Merrill Edge Small Business 401(k) are provided by Plan Administrators, Inc. (PAi). Investment advisory and fiduciary services are provided by Morningstar Associates, LLC, a registered investment advisor and wholly owned subsidiary of Morningstar, Inc. Morningstar Associates, LLC is a provider of investment management solutions including investment advisory and retirement plan services. Educational call center support will be provided by PAi. Bank of America Corporation, PAi and Morningstar Associates, LLC are not affiliated.

3 Fees will be deducted from business account.

4 Plans with just the owner or owner and spouse pay the administration fee based on one employee.

5 Solo employers with less than $250k in plan assets will pay $20. Solo employers with more than $250k in plan assets will pay $25.

6 Fees will be deducted from each participant's account.

7 Costs for services, based on assets, come out of participating individuals' account balances.

8 Morningstar Associates, LLC selects the investments and is responsible for the ongoing monitoring and maintenance of the investments and model portfolios.

9 Plan Administrators, Inc., (PAi) provides call center education and support to plan participants.

10 Merrill Lynch is responsible for ongoing product management and vendor oversight, as well as trading and custodial services of plan assets and monthly transaction statements.

11 Plan and Participant level recordkeeping services are performed by PAi. This expense is deducted automatically each month.

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