Retirement Saving Options for Small Businesses
Small businesses do not have the same needs as large businesses; this is true even for retirement savings account. There are many different types of retirement savings accounts and some will work better for small businesses than others.
A Simple IRA is an incentive savings plan for employees of a small business. It is rather simple to set up and the employees can make their contributions in whatever amount they would like. The employer is still required to match one to three percent of what the employee contributes. This can be a good plan for the small business owner.
The next type of plan is called a simplified employee pension or SEP. This is usually paired with a qualified retirement plan or QRP; this is for the self-employed individuals. With these plans the employer makes contribution to the plan, but the employee cannot. These contributions are tax-deductible and have potentially have much higher restrictions on maximum contributions than the Simple IRAs have.
There is another retirement savings plan that small businesses owners should consider it is an individual 401(k) account. This is somewhat similar to a traditional 401(k) however with the individual 401(k) account less administration is required. This plan allows for contributions with up to twenty five percent of compensations.
An employee needs to remember that even with these plans they can have and contribute to your own IRA or Roth IRA. By having one of these accounts and contributing to it on top of your retirement savings plan at work, you can really maximize your savings for retirement. If you are unsure of whether or not you want to get one of these accounts then you should consult a financial advisor and see what they think will be best for your retirement.
So how does the small business owner decide what plan is best for them and their employees? There are many options and the owner needs to think about what is best not only for them as well as for the people that they employ. There are financial advisors who are available to help the small business owner decide which plan they want to go with.
There are many factors that need to be taken into consideration when deciding which plan to go with. For example the number of employees that the small business has plays a big part on which plan is best for the employer and employees. When a small business owner is looking to get a retirement savings plan for themselves and as well as their employees there is a lot to consider, the owner needs to take time and do some research before deciding on which plan will benefit them the most.