Small Business Retirement Plans
Present alternatives help small business owners save a noteworthy amount of money in tax-deferred small business retirement plans. If you’re seeing or running your own business, think big when it comes to saving for retirement. Oftentimes with all the excitement around setting up a company, one tends to forget about retirement plans for them and their employees. Don’t disregard setting up an own retirement plan because fortunately, there are major benefits to small business retirement plans that compensate the time it might take to set one up.
Small business retirement plan does not only allow a business owner to sock away a considerable amount for the future, but it also takes a sizeable tax deduction as well. Small business retirement plans can help fill in any personal savings gaps toward a more financially secured future. What are the benefits of getting small business retirement plans today for business owners? First, they may be able to take a tax deduction just for saving money for the future, secondly, all earnings on their investments grow tax-deferred until withdrawn, and they can include their spouse if they work together and also have a major advantage to offer employees nowadays or when their business gets bigger.
And what about the employees of your small business, are you finding it hard to have savvy employees working for you? The problem might just be on the small business retirement plan presented; it might not be appealing to your employees. So where does one start? Here is a rundown of small business retirement plans option for your employees, based on 2006 rules and requirements, the best plan however, depends on ones needs:
Simplified Employee pension Plan (SEP IRA)
For a handful of employees and looking for a plan that is really low cost and low maintenance, consider this plan. The SEP IRA is funded with tax-deductible employer contributions that cover all eligible employees. Contributions from employees are not allowed. There is no “plan document” and filing annual reports with IRS are not needed. Contributions can differ from year to year, so if your business hits the lean, you are not locked in.
Savings Incentive Match Plan for Employees (SIMPLE IRA)
These retirement plans are good for your employees because they allow employee contributions. They command an employer match, only problem is it will not allow you to sock away much for yourself. Annual contributions for 2006 are generally restricted to $10,000 plus an employer matching contribution. If you have a small business with less than ten people, then these small business retirement plans for your employees is a good way to get started.
There are many other small business retirement plans offered for both the owner and employees that can do a lot of good to the business. Also remember that in addition to small business retirement plans, you can also fully fund an IRA and create catch up contributions if you are fifty years old or older.