401(k) plans
401(k) plans can become very confusing if you are trying to navigate the market without an expert on your side. We are not perfect by any means but we can be your partner. This page on 401(k) plans on the IRS website is also a good place to find important information.
Just please keep in mind that our vendors are more than willing to FLOOD our doors with marketing material galore we could pass on at any time! Just ask!
We are aware that as a small employer you must be extremely sensitive to cost. We certainly want to be sensitive to this and usually only rarely would we see a need for a 401(k) in the truly small retirement plan space.
We have run into some situations where some sort of executive bonus type plans might actually be more of an appropriate item to implement. We think this IRS page is a good resource to review. They do actually note several of the different options.
Simplified Employee Pension (SEP)
Simplified Employee Pension (SEP) plans can provide a products for an employer to set aside money for themselves and their employees. A SEP does not have the start-up and operating costs of a conventional retirement plan and allows for a contribution of up to 25 percent of each employee’s pay. Here is a short list of details:
- Easy to set up and operate
- Low administrative costs
- Flexible annual contributions
- Employer must contribute equally for all
SIMPLE IRA Program Highlights is a good PDF from American Funds that will articulate a reasonable priced plan that we have utilized in the past with clients.
This type of a structure certainly has a wide array of both positives and negatives which we like to really build upon as we start a plan.
SIMPLE IRA
We find value in these type plans for small to medium businesses that can almost always provide a match, want something SIMPLE and are concerned about costs.
SIMPLE IRA plans are exactly what they sound like. In essence, this is the easiest or most “simple” type retirement plan you can offer as an employer. This page on the IRS site details out how to administer a plan such as this.
These plans are individually owned so the entire account balance is controlled and handled by the employee. There is some work on the employers side of this type plan from an admin, match and few other perspectives.
Payroll deducted IRA plans
Payroll deducted IRA plans are exactly what they sound like. In essence, this is simply an IRA account (owned individually) that has money directly payroll deposited into the account. This page on the IRS site details out how to administer a plan such as this.
These plans are individually owned so the entire account balance is controlled and handled by the employee.
Payroll Deduction IRA Program Highlights is a good PDF from American Funds that will articulate a reasonable priced idea that we have utilized in the past with select clients.
This type of a structure certainly has a wide array of both positives and negatives which we like to really build upon as we start a plan.
We find value in these type plans for very small employers that really are not looking to grow into something large and that never really aspire to grow their business much beyond a few employees.
