Employer Sponsered Plan
Advantages and Disadvantages

Advantages

The participant is fully vested in elective deferrals at all times.
Same tax deduction and deferral of income advantage as a traditional IRA
An employee can designate some or all elective deferrals as Roth (not excluded from income) that are generally subject to the same taxation under the Roth IRA rules.
The maximum contribution allowed is generally greater than an IRA.
Elective deferral limits are greater than SIMPLE IRAs.
Employers often match dollar-for-dollar employee elective deferrals up to certain percentages, providing employees incentives to participate in the retirement plan.
Elective deferrals through payroll withholding make it easier for employees to save for retirement.

Complexity and restrictions placed on highly compensated employees make it difficult and sometimes expensive to administer.
Key employees do not always receive the full benefit of allowable elective deferrals. These restrictions may not apply to certain safe harbor 401(k) plans.

The participant is fully vested in elective deferrals at all times.
Same tax deduction and deferral of income advantage as a traditional IRA.
An employee can designate some or all elective deferrals as Roth (not excluded from income) that are generally subject to the same taxation under the Roth IRA rules.
Elective deferral limits greater than SIMPLE IRAs.
Employers often match dollar-for-dollar employee elective deferrals up to certain percentages, providing employees incentives to participate in the retirement plan.
Elective deferrals through payroll withholding make it easier for employees to save for retirement.

Limited as to what types of employers are eligible to offer a 403(b) plan to employees. Generally available only for employees of certain tax-exempt organizations

Cash Balance Plans offer guaranteed pension benefits for employees
These plans can offer unique incentives to attract and retain employees.
Your business has some flexibility with its contributions to hypothetical accounts.
These plans have higher limits on contributions.
Cash Balance Plans allow more portability to employees that are fully vested.
The plan can be less difficult to maintain than other retirement plans.

Record-keeping costs associated with cash balance plans may be higher than with a traditional pension plan.
Growth rates are set low and conservative allowing limited growth.
A cash balance plan is not always more cost-efficient than a traditional pension plan, so it is best to consult with a retirement specialist as to whether a cash balance plan will save you more money compared to a traditional pension plan or other retirement plans.

*401(k) & 403(b) List taken from The Tax Book 2020 edition