Retirement Plan for Nannies

Features and Benefits of a Retirement Plan for Nannies

Features and benefits effective January 1, 2026:

Designed for Household Employers

A SIMPLE 401(k) plan is perfect for families with household help. Domestic workers – like nannies, housekeepers, senior caregivers, and others – provide personal services to the family and can not be added to a retirement plan offered to business employees through their company or sole proprietorship. Please note that non-resident aliens are not able to participate in the plan.

Tax Savings

Household employees can save pre-tax via payroll deferrals of up to $17,000; those 50+ can defer an additional $4,000 as a catch-up contribution; and those aged 60-63 can defer an additional $5,250 as a catch-up contribution.

Roth Deferrals

Roth 401(k) deferrals are allowed. Employees will pay income taxes on the deferred contribution. In most cases, however, the earnings are not subject to income taxes upon distribution.

Flexibility

Household employees can modify deferral amounts.

Employer Contributions

The employer must make mandatory contributions, on a dollar-for-dollar basis, up to 3% of the employee’s gross pay, which can be used to reward and retain valuable household workers.

Vesting

Money contributed to an account by an employer and their worker is always 100 percent vested. Vesting refers to an employee’s “ownership” of their plan benefits.

Self-direction of Investments

Household employees can self-direct their investments from a list of monitored, low-cost mutual funds. There are no restrictions on making changes, and no commissions are assessed. Advisors are available to help counsel employees and understand investment options in the plan that may be suitable for them.

Online Enrollment

Once a household employer adopts a plan, their worker can enroll online, choosing the amount they wish to defer and how they would like to invest their contributions.

Employee Support

Household employees have access to fiduciary financial advisors who can provide them with professional fund management and one-on-one advice. A fiduciary is an individual who acts in the employee’s best interests by buying and selling investments that are the best fit for the employee and by avoiding conflicts of interest.

Transferability

If the household employee changes families and their new family uses GTM Payroll Services, that family can adopt the plan and continue 401(k) contributions, or the employee can roll their money into another qualified retirement plan or individual retirement account (IRA). Employees will always be 100 percent vested in their rollover account. Assistance is available for any employee who wishes to roll over their account.