Choosing A Retirement Plan for Your Small Business

Wealth | 08.15.2023
As a small business owner, you’re always looking to attract and retain top talent. Offering a retirement plan is an excellent way to provide employees with a competitive benefits package while helping them save for the future. You know that planning for retirement is essential, but finding the right plan for your business can be daunting, given the many options available.

Five reasons why every business should have a retirement plan are:
  1. Employer contributions are tax deductible.
  2. Provide a benefit to help attract, reward, and retain quality employees.
  3. Assets in the plan grow tax free.
  4. Flexible plan options.
  5. Tax credits and other benefits for starting a plan may help reduce costs.

Below are a few of the most used retirement plans for small businesses:
  • 401(k)
    • Multiple contribution options.
    • Flexible employer vesting options.
    • Plan may permit loans for participants.
    • Higher costs to operate and maintain.
    • Stricter employee minimum coverage requirement.
  • Simple IRA
    • Easy to setup and maintain.
    • Less than 100 employees.
    • Cost effective.
    • Contributions are immediately 100% vested.
    • Employer must make contributions.
    • Lower annual contribution limits.
    • Easy to setup and maintain.
    • Flexible contribution rules.
    • High contribution limit.
    • Contributions are immediately 100% vested.
    • Only the employer may contribute.

Each plan has different features, benefits, and costs, with varying limits and rules. Your business may be complex with many variables to consider when deciding which type of plan is best. A financial professional may be able to help determine which retirement plan will provide maximum efficiency for your unique business.

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