Alignment(k) Start’s Traditional 401(k) offers maximum flexibility, letting employers decide when and how much to contribute based on company goals, workforce needs, and financial performance.
Whether you’re rewarding key employees, managing variable budgets, or want more control over contribution decisions, this option is backed by TRA’s experience and administration services.
The Traditional 401(k) option offers flexibility for businesses that want greater control over contribution decisions and plan strategy.
Key Benefits
- Greater flexibility over employer contributions
- Ability to decide contribution levels annually
- Supports varying business goals and budgets
- Opportunity to reward employees through discretionary contributions
- Customizable retirement plan strategy
- Flexible approach as business needs evolve
Plan Features
| Eligibility | Age 21 requirement One year of service and 1,000 hours worked Quarterly entry dates |
|---|---|
| Employee Contributions | Pre-tax contributions Roth contributions Catch-up contributions |
| Employer Contributions | Discretionary matching contribution Discretionary profit-sharing contribution Employer contribution decisions made annually |
| Automatic Enrollment | 10% automatic enrollment Eligible employees automatically enrolled unless they elect otherwise |
| Participant Features | Participant loans permitted Hardship withdrawals available In-service withdrawals available at age 59½ |
| Vesting | Discretionary matching contributions subject to a 6-year graded vesting schedule Discretionary profit-sharing contributions subject to a 6-year graded vesting schedule |
Key Plan Provisions, Traditional 401(k) Option
| Eligibility | Service requirement: One year of service, 1,000 hours worked in a 12-month computation period Age requirement: 21 Entry dates: Quarterly |
|---|---|
| Compensation | W-2 compensation Exclude fringe benefits Include post-severance compensation |
| Excluded Classes | Union employees Leased employees Non-resident aliens |
| Employee Deferrals | Pre-tax contributions Roth contributions Catch-up contributions allowed |
| Automatic Enrollment | Initial percentage: 10% Permissible withdrawals are allowed in the first 90 days after the first automatic deferral |
| Discretionary Matching Contribution | Determination period: Plan year, true-up required if deposited more frequently Compensation prior to participation is excluded Allocation requirements: None |
| Discretionary Profit-Sharing Contribution | Method: New Comp, cross-tested Compensation prior to participation is excluded Allocation requirements: Employed on the last day of the applicable plan year and work 1,000 or more hours in the applicable plan year |
| Vesting | Discretionary employer match: Six-year graded Discretionary employer profit sharing: Six-year graded Exclusions: Service prior to age 18 |
| In-Service Withdrawals | Available from rollover source at any time Hardship withdrawals from all sources with no limitations Age 59½ in-service withdrawals from all sources with no limitations Loans permitted |
Due to the inclusion of both Roth and catch-up provisions, special instructions may be included in DocuSign reflecting TRA’s recommendation to use a deemed election for highly paid individuals.
Why Businesses Select This Plan
Maximum Flexibility
Adjust contribution strategies based on business performance, budget considerations, and workforce objectives.
Design It Your Way
Customize your plan to align with company goals while maintaining flexibility over employer contribution decisions.
Reward Performance
Use discretionary matching and profit-sharing contributions to recognize employee contributions and company success.
Adapt as You Grow
As your business evolves, your retirement plan strategy can evolve alongside it.
This plan may be a strong fit if you:
- Want flexibility over annual employer contributions
- Prefer to determine contribution levels each year
- Have changing budgets or business priorities
- Want to customize your overall retirement strategy
- Are interested in rewarding employee performance through discretionary contributions
This option may be less appropriate if you:
- Want a plan structure specifically designed to help simplify annual nondiscrimination testing
- Prefer a predefined employer contribution formula
- Want a contribution strategy based on employee participation or a fixed employer contribution
How the Traditional Option Works
With Alignment(k) Start Traditional, employees can make pre-tax, Roth, and catch-up contributions, while employers decide each year whether to make matching or profit-sharing contributions. The plan offers maximum flexibility, allowing contribution strategies to align with changing business goals and budgets.
Employer Contribution Options
- Discretionary matching contributions
- Discretionary profit-sharing contributions
- Annual flexibility to adjust contribution levels
Compare Alignment(k) Start Plan Designs
| Feature | Safe Harbor Match |
Safe Harbor Non-Elective |
Traditional 401(k) |
|---|---|---|---|
| Employer Contributions | Required Match Formula | Required 3% Contribution | Discretionary |
| Contribution Flexibility | Moderate | Moderate | Highest |
| Employee Participation Influences Contributions | Yes | No | Optional |
| Employer Match Required | Yes | No | No |
| Annual Testing | Generally Simplified | Generally Simplified | May Be Required |
| Best For | Employers encouraging employee savers | Employers seeking predictable contributions | Employers seeking maximum flexibility |
Help clients choose the right 401(k) solution with a simple, guided process backed by TRA’s retirement plan expertise.
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Do I have to make employer contributions every year?
No. Employer contributions are generally discretionary, allowing employers to decide annually whether contributions will be made and at what level.
Will my plan require annual testing?
Alignment(k) Start Traditional 401(k) plans may be subject to annual nondiscrimination testing requirements.
Can employees make Roth contributions?
Yes. Participants may make both pre-tax and Roth contributions.
Can I provide a matching contribution?
Yes. Employers may choose to provide discretionary matching contributions.
How does vesting work?
Discretionary matching and profit-sharing contributions follow a 6-year graded vesting schedule.
Can I change contribution levels from year to year?
Yes. One of the primary advantages of an Alignment(k) Start Traditional 401(k) plan is the flexibility to adjust contribution levels based on business goals and financial conditions.
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