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As an employer, you may want to establish one or more retirement plans for yourself and/or your employees. Having a plan can provide significant benefits for both you and your employees (if any). There are many different types of retirement plans, however, and choosing the right one for your situation is a critical decision. You want a plan that will meet both your goals as the employerand the needs of any employees you may have. In addition, it is important to balance the cost of establishing and maintaining a plan against the potential benefits.
An individual 401(k) plan, also known as a Solo 401(k), is really nothing more than a combined profit-sharing plan and 401(k) plan implemented by a self-employed individual or small business owner with no full-time employees (unless the full-time employee is the owner's spouse). These plans, which went into effect after passage of the Economic Growth and Tax Relief Reconciliation Act of 2001 (2001 Tax Act), can allow for significant tax-deferred contributions.
A Simplified Employee Pension (SEP) is a written planthat allows small-business owners to make retirementcontributions to traditional IRAs (SEP-IRAs) set up forthemselves and for each eligible employee. Thesecontributions may be deducted from your business'sincome and excluded from your employees' income.
A SEP may not only provide you a tax-advantaged way to save for your own retirement, but may also help you attract and retain qualified employees by providing for their retirements.
The Savings Incentive Match Plan for Employees of Small Employers, SIMPLE IRA Plans are both easy and inexpensive to administer.
You promise to match employee contributions dollar for dollar up to 3% of pay, or to make a "nonelective" contribution for all eligible employees, whether or not they contribute, equal to 2% of pay.
Business Retirement Plans 101
Retirement Plans can come in many different shapes and sizes; using this easy-to-follow guide to get a run down on the different options available.
Tax Benefits of Retirement Savings Plans
Depending on the type of plan your employer offers, you may be able to benefit from current tax savings; tax deferral on any investment returns you earn on the road to retirement; and possibly even tax-free income in retirement.
Employee Stock Ownership Plans (ESOP)
What is an ESOP, how do they work, and what are their benefits?