Tags: Essays About Christmas HolidayPoetry HomeworkEssay Of Stress ManagementSpss AssignmentHow To Solve Fraction ProblemsLaw Dissertation IdeasParts Of Introduction Of A Research PaperRhetorical Analysis Essay Of The Declaration Of IndependenceMath Homework Answer
While you won't have a company plan to help make your decisions, there are a number of retirement account options for self-employed workers and small business owners.Not only do these choices offer everything you need for your retirement plan, but there are a couple of options that you can utilize if you're a small business owner with employees.
“This is important, because business owners are the least prepared of all people for retirement, even less so than their employees, according to studies.” Another advantage of offering a retirement plan is helping the owner attract, retain and motivate employees, Kalish says.
Depending on your answers, a retirement specialist can steer you toward the appropriate small business retirement plan options.
A study by LIMRA showed that only 42 percent of small businesses offered retirement plans – despite the fact these plans not only help employees but offer great benefits to the employer, too.
“From the perspective of the employer/business owner, it’s the ability to put money away for retirement on a tax-advantaged basis,” says Jerry Kalish, a small business benefit services consultant in Chicago.
It’s an easy account to open and annual account fees are low or even non-existent.
The rules on contributions are also simple – you can invest as much as 25 percent of your net income up to a cap that changes periodically to keep up with inflation. Contributions are tax-deductible and the SEP IRA also offers some funding flexibility.As you compare plans, consider the range of investment options and the fees associated with those investments and with managing the account.And of course, one major factor to consider is whether you need a retirement plan option that allows employees to participate if your small business is supported by a team.It’s possible to wait until after you’ve filed your taxes to fund the account, so if your income is higher than you thought, you can make a larger contribution and lower your tax bill.If you have employees, they cannot contribute to the SEP IRA, but they can make their own contributions to a traditional or Roth IRA.Here are the most popular retirement plans for small businesses, according to Jeff Cutter, CPA, PFS, a financial planner in Mansfield, Mass.For business owners who employ themselves, and possibly a spouse, the Individual 401(k) helps maximize retirement contributions. Decisions on health care plans, retirement plans and other benefits are often left solely to the owner.Offering a small business retirement plan to employees isn’t always on the radar.Be aware that should you make a withdrawal from the account within two years of opening it, there will be a 25 percent penalty.For those hoping to build up their retirement account quickly and who have a lot of money to contribute, an Individual 401(k) is a popular option.