What are the statutory pension benefits? What do they cover?
There are no statutory pension benefit requirements in the U.S.
401(k) deductions are taken weekly from each supported employee’s check and should you choose to match a percentage, a weekly or year-end contribution may be made.
Matching your supported employee’s 401(k) contributions
Please note that there is no requirement for you to match your supported employee’s contributions. Velocity Global’s plan is currently set up with a discretionary match. Typically, we reach out to all our clients who have a match-eligible supported employee to inquire if they would like to provide a discretionary match each year. You can decline to offer a match, or offer a match under the following provisions:
- For year-end contributions only, the supported employee must be employed as of the last day of the year and have participated in the 401(k) plan to receive a match;
- For weekly matching, contributions will begin when the supported employee is eligible to participate in and contributes to the plan and will continue as long as the supported employee remains eligible and contributes during the plan year.
- Your match cannot exceed what the supported employee contributed themselves and/or exceed IRS (Internal Revenue Service) plan limits; and
- The same match formula must be offered to all your eligible supported employees. For instance, you cannot offer a 5% match for one supported employee and only a 3% match for another.
Please note that when you commit to a specific 401(k) match at the start of employment, and we document that in the offer letter, you are committed to that match and cannot waive participation from year to year, unless you choose to amend the employment agreement. If you do not commit to a match from the start, we will check in with you at the end of each year to invite you to participate.
Maximum annual contribution to the 401(k)
The IRS-regulated (Internal Revenue Service) annual maximum for the employees is US$22,500 for 2023. If the supported employee is over 50 years of age, they can contribute up to an additional US$6,500 for a maximum contribution of US$29,000 in 2023. You can match up to 100% of the supported employee's contribution up to the IRS maximum of US$29,000 for 2023. Please note that your contribution cannot exceed your supported employee's contribution.