Morgan Stanley Retirement

Last Updated on January 15, 2024 by Ben

Morgan Stanley Retirement

It’s never too early to start preparing for the future. Morgan Stanley Retirement helps you do just that by providing retirement plans tailored to your needs. Morgan Stanley Financial Advisors are available to answer any questions about Morgan Stanley Retirement, and they can help get you started on a plan today!

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Choosing a Retirement Plan for your Business

Like a 401(k), a retirement plan is a systematic way to save for retirement and provides one of the most significant tax benefits available today. A variety of plan elements may be used to fit your company’s requirements by customizing the plan.

A company’s retirement plan may also have a beneficial impact on employee productivity and help to attract and retain employees. Its value as an employee benefit, coupled with the significant tax savings it can provide for you and your firm, emphasizes the need for a retirement program for your organization.

After you’ve looked over the variety of retirement plan alternatives, you might want to have your company’s retirement program evaluated. Request a free Retirement Plan Proposal from one of your Morgan Stanley Financial Advisors or Private Wealth Advisor.

IRA Based Plans

Simplified Employee Pension (SEP) Plan

The SEP Plan is a substitute to the several other qualifying retirement plans accessible to a company owner. The SEP Plan provides many of the tax advantages of a qualified retirement plan while reducing much of the administrative work and expense that goes along with providing benefits for employees.

Employer payments are immediately deposited into a worker’s SEP-IRA. Contribution levels are arbitrary and could fluctuate from year to year. An employer may contribute up to 25% of each eligible employee’s earnings, or $56,000, whichever is lower, in 2019.

Suppose the plan’s sponsor is a self-employed person or partnership. In that case, their contributions will generally be restricted to the smaller of (a) $56,000, or (b) 20% of earned income less one-half of self-employment taxes, with no deductions for the self-employed individual. It’s hard to calculate all of this, so you should definitely contact your tax and legal advisors.

Employees who have worked in three of the prior five calendar years and are at least 21 years old must be included in the plan, regardless of whether they earned $600 or more in a particular year. For inflationary reasons, this amount is susceptible to yearly change.


  • Contribution levels may vary from year to year or be completely absent in any given year.
  • The employer’s SEP-IRA account is used to hold the employee’s IRA contributions of up to $6,000 for 2019 (or $7,000 if 50 or older) or 100% of earned income, whichever is less. The deductibility of the IRA contribution will be determined based on the IRA owner’s MAGI.
  • Because of the simplicity of their structure, SEPs are less expensive to operate than other qualified plans. The Internal Revenue Service does not currently require employers to file any special reports due to certain disclosure requirements.
  • At any time, you may roll over assets between IRAs or qualified plans.


  • Employees are always fully vested in their employer’s contributions. Deferred vesting is not an option.
  • There are no pretax employee contributions.
  • Loans are not permitted.
  • Employees may withdraw funds at any time, subject to income tax and a 10 percent penalty tax, if applicable.


The Savings Incentive Match Plan for Employees (SIMPLE) IRA Plan makes qualified plans more accessible to small businesses. Employers with 100 or fewer workers who do not already have another qualifying retirement plan are eligible for the SIMPLE IRA Plan.

Employees may make SIMPLE IRA contributions in the current year by October 1 or as soon as administratively feasible for businesses that have been founded after October 1. Employee contributions are made on a salary deferral basis, and employer contributions must be made by the tax-filing deadline, including extensions.

Employees who earned $5,000 or more in any two of the prior calendar years and are expected to earn $5,000 or more in the current year are eligible to participate in a SIMPLE IRA Plan. Employers must give matching contributions in the form of a dollar-for-dollar match on employee salary deferrals of up to 3% of employee compensation or nonelective contributions of up to 2% of employee compensation (subject to a $280,000 compensation cap) for all eligible employees. Employees can defer 100% of their pay, up to $13,000 ($16,000 for individuals over the age of 50). Vesting is immediate and 100%.


  • Employees who contribute towards their retirement on a pretax basis are rewarded with a 3% matching plan.
  • The ability to match 1% of compensation in any two out of five years.
  • There are no reporting requirements, but there are certain transparency obligations.
  • SIMPLE IRA accounts are not subject to the nondiscrimination and top-heavy provisions that apply to other qualified plans.
  • Lower admin costs


  • All contributions are 100% vested.
  • Alternative programs are more popular among employers seeking to improve their retirement benefits.
  • Mandatory employer contributions.
  • Lenient eligibility requirements.
  • No loan provision is allowed.
  • Employees may withdraw money at any time, subject to income tax. Furthermore, for individuals under the age of 59½, distributions within the first two years are usually subject to a 25% penalty fee, and after those two years (subject to certain exemptions), there is a 10% penalty tax (subject to exceptions).
  • Employer contributions to another retirement plan are limited to those made exclusively for collective bargaining personnel.

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Defined Contribution Plans

Profit-Sharing Plan

The Profit Sharing Plan is a quite flexible qualified plan. An employer may usually contribute up to 25% of each eligible employee’s taxable compensation on a tax-deductible basis. The maximum amount that may be given to any one participant under the PHSA is 100% of his or her compensation, which was $56,000 for 2019. The contribution percentage and money amount can vary from year to year. Since the employer makes a decision to contribute every year, many businesses tie the amount of contribution to company profitability, but it is not a requirement that the business makes a profit to contribute.

Conventional profit-sharing plans are typically handled in a similar manner, with contributions being assigned to participants in proportion to their individual compensation or on the basis of some other non-discriminatory criteria such as those set out in the Permitted Disparity regulations.

Age-Weighted Profit-Sharing Plan

The Age-Weighted Profit Sharing Plan is designed to allow employers to make a discretionary contribution each year while allocating contributions based on the ages and salaries of individuals.

This allows a greater portion of the overall employer’s contribution to be paid on behalf of older employees. An Age-Weighted Profit Sharing Plan formula makes the assumption that older workers have less time to build up retirement savings and, as a result, larger contributions must be made on behalf of older participants to achieve equitable benefits at retirement. As a consequence, the proportion of contributions allocated to older participants is increased.

New Comparability Profit-Sharing Plan

A New Comparison Profit Sharing Plan allows contributions to be assigned based on criteria like job category, pay, and age. This enables the employer to provide a larger part of the contribution on behalf of important personnel, particularly owners.

Contributions to conventional Profit Sharing Plans are usually apportioned in direct proportion to each participant’s pay. If they are made to other profit-sharing plans, they are also allocated on a nondiscriminatory basis, such as the Permitted Disparity criteria. The New Comparability Plans provide for greater contribution allocations for important employees than can be obtained with conventional plans.

Far from the Age-Weighted Profit Sharing Plan, which may benefit both key and non-key workers (possibly including both main and non-main employees), a New Comparability Plan can be designed to favor key personnel who are younger.

401K Plans

Traditional 401(k) Plan

The 401(k) plan is an employer-sponsored retirement savings program that allows your employees to put money into it with pretax income. Payroll deductions are usually used to make contributions to the plan.

Employees’ contributions to a 401(k) will lower their gross income for federal income tax purposes. In 2019, The maximum deferral to a 401(k) plan was 100% of pay or $19,000, whichever is less. Individuals who are 50 years old or older will be eligible for extra “catch-up” contributions of $6,000 ($25,000 total). In 2018, a maximum of $56,000 ($62,000 for those aged 50 or older) in combination employee and employer matching and profit-sharing contributions may be allocated to an individual.

Roth 401k Plan

The Roth 401(k) was introduced on January 1, 2006, as a substitute to the conventional 401(k). Employees may now make after-tax contributions to their employer’s 401(k) plan through the Roth 401(k). A Roth 401(k) allows employees to contribute up to $19,000 of pay in 2018 ($25,000 if age 50 or older), with each employee’s combined amount of Roth and traditional 401(k) contributions not exceeding these limits.

Contributions to a traditional 401(k) plan are made using pretax money, while contributions to a Roth 401(k) are made using after-tax money. Each participant will have to assess the benefits of contributing to a Roth 401(k) versus a regular 401(k), such as receiving a current income tax deduction and potentially having no taxation on future plan distribution.

According to IRS rules, a participant may roll over all or part of their vested non-Roth account balance into a Roth 401(k) that allows Roth post-tax contributions. The Roth 401(k) can be set up either as a replacement for or an addition to an existing 401(k) plan. If you believe a Roth 401(k) may be beneficial for your company, contact your Third Party Administrator, Financial Advisor, or Private Wealth Advisor to learn how to set one up.

Safe Harbor 401k Plan

A Safe Harbor 401(k) may be an excellent alternative for a company just getting started with a plan. It could also be an excellent choice for a firm with a typical 401(k) plan but has struggled to comply with the annual nondiscrimination tests. The plan is considered to satisfy the Actual Deferral Percentage Test and be exempt from top-heavy restrictions by agreeing to certain contribution and vesting requirements. Highly compensated employees will be able to maximize their salary deferrals under this scenario.

Employer Contribution Limits

A mandatory match or nonelective contribution is required. The company matches employee contributions. It matches them dollar-for-dollar up to 3%. Or it can make other matching contributions. The employer can also make a contribution of 3% for all eligible employees. This is subject to the $280,000 compensation cap. Additional discretionary employer contributions are permitted.


Safe Harbor 401(k) contributions are fully and immediately available to you. The employer might also give you more money from their company. But these contributions might be on a cliff or graded schedule.


New plans must be set at least three months before the plan year’s end. Employees must be notified at least 30 days in advance of the commencement of the plan year unless exceptions apply. This 30-day notice requirement also applies to existing plans that incorporate the Safe Harbor 401(k) provisions as a result of an amendment.

Defined Benefit Plans

The Defined Benefit Plan may help many business owners increase the amount they contribute to a qualified retirement plan. Actuaries use current contributions to calculate an individual’s expected future benefits based on a set income barrier and other criteria, such as compensation, investment performance, years until retirement, and life expectancy after retirement.

It’s required that employers contribute to a Defined Benefit Plan, which must satisfy minimum funding requirements. When calculating the benefits and contributions for a Defined Benefit Plan, the actuary may include compensation up to $280,000 in 2019. In general, a Defined Benefit Plan may provide for a lifetime annual retirement income of up to the highest three-year average compensation or $225,000, whichever is lower.

Investments and Retirement Plan Administration

While selecting the particular retirement program design for your company, you should consider the types of investment alternatives that will be included in it and how they will be managed. Keeping track of and maintaining plans are critical ongoing responsibilities that must be addressed from the start in order for the program to run smoothly and comply with all current and future legislation.

As the plan’s sponsor, you may be held responsible to a certain extent for the investments in the plan. The size of your responsibility is determined by a variety of criteria, including whether you pick the investment options or hire a professional money manager to manage a single pool of money. Employees might be required to make investment selections as part of a plan that is organized around individual accounts, which may decrease your fiduciary concerns.

However, you may still be in charge of choosing one or more investment alternatives for your employees to choose from, and so you’ll need to conduct thorough research on the options and track their performance on a regular basis. If desired, your Morgan Stanley Financial Advisor or Private Wealth Advisor can assist you in developing an investment policy statement. You should consult your legal experts regarding your fiduciary responsibilities under the various types of plans available.

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With Morgan Stanley retirement, you can take charge of your money and make the most out of it. This is a great resource for businesses looking to start or maintain the right retirement plan. You can find out more about what they offer, how it benefits you and your employees, and who qualifies by contacting one of their advisors today!

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