Small business owners handle practically every aspect of their day-to-day business. And just as every business has its own unique staff it also has unique retirement benefits needs. Meridian Financial Partners is a small business; we understand. Meridian works with small business owners to assist them with establishing a plan that works for them and their business. There are several types of retirement plans to choose from and without expert help, they can be confusing. There are pros and cons to each plan and it is important to choose the one that best suits your needs.
Let Meridian work with you to determine what plans are right for your business.
Common Business Retirement Plans
SIMPLE IRA
Simple IRA’s are employer-sponsored plans ideal for companies with 100 employees or less. They work much like a 401(k) plan, but with little to no expense for the employer. Employers can match up employee contributions or make unmatched contributions.
SEP IRA
SEP IRA’s is a traditional IRA for self-employed business owners. Any business owner with one or more employee or freelance income can set one up. There is no cost to set up and SEP IRA’s are easier to establish than solo 401(k)s.
Solo 401(k)
With a Solo 401(k), a sole proprietor can set up and make contributions as both the employer and employee. Solo 401(k)s cover a business owner and his or her spouse, but not employees.
401(k) Plan
The most widely known of retirement plans, 401(k)s allow for maximum flexibility and contributions, but they cost money to operate. To offer a 401(k), a Third-Party Administrator (TPA) is typically needed.
Profit Sharing Plan
Profit sharing plans allow for discretionary employer contributions without restrictions. There are formulas that need to be set and followed – this is typically done by a TPA firm (Third Party Administrator). This feature can be added to a 401(k) plan to allow for salary deferral.
IRAs or ROTH IRAs
Individual Retirement Arrangements (IRA)s can be established by anyone with taxable compensation (or spouse with taxable compensation) and aren’t age 70.5 by the end of the year. Traditional IRAs can provide a tax deduction, whereas ROTHs do not. ROTH IRAs are not taxed once withdrawn after age 59.5, where as most IRA assets are taxed as income once withdrawn.