Qualified Retirement Plans
In today’s dynamic economy, the acquisition and retention of talent can be one of the biggest issues facing small business. A properly structured Qualified Retirement Plan can be an effective tool for attracting and retaining talented employees. Whether it is a Defined-Benefit Plan, Defined-Contribution Plan, or a combination of both, these plans provide financial incentives for employees.
Today, more and more employees are investing in their futures through Qualified Retirement Plans offered by their employers. Employees who participate in these plans assume responsibility for their retirement income by contributing part of their salary and, in many instances, by directing their own investments.
If you are among those who direct your investments, you will need to consider the investment objectives, the risk and return characteristics, and the performance over time of each investment option offered by your plan in order to make sound investment decisions. You should also have a good understanding of the fees associated with your particular plan and how those fees will affect your investment returns and retirement income.
There are several types of plans from which your business can choose from when offering a Qualified Retirement Plan to your employees. Yaegers Financial Services can assist you in reviewing all of your options and selecting which of the plans listed below is right for you and your business.
401(k) Plan << More
A 401(k) plan is an employer-sponsored retirement plan made possible by Section 401(k) of the Internal Revenue Code. The plan allows employees to save a portion of their salary on a pre-tax basis for accumulation until retirement. If the plan so provides, employees can also contribute on an after-tax basis (Roth after-tax contributions), which can be withdrawn tax-free at a later date (certain conditions apply).
403(b) Plan << More
403b plans are very similar to 401k plans with one exception-they are only available for certain non-profit groups and educational institutions. A 403b plan is either a traditional 403b or a Roth 403b, which have the same tax implications as traditional 401k plans and Roth 401k plans, respectively.
SEP IRA << More
An SEP is a retirement plan established by employers, including self-employed individuals (sole proprietorships or partnerships). The SEP is an IRA-based plan to which employers may make tax-deductible contributions on behalf of eligible employees. The employer is allowed a tax deduction for plan contributions, which are made to each eligible employee's SEP IRA.
SIMPLE IRA << More
A SIMPLE IRA, a retirement plan that may be established by employers, including self-employed individuals (sole proprietorships and partnerships), allows eligible employees to contribute part of their pre-tax compensation to the plan. This means the tax on the money is deferred until it is distributed. This contribution is called an elective-deferral or salary-reduction contribution.
As an employer sponsoring a Qualified Retirement Plan for your employees, you should make sure your plan is in good order. The plan should meet your retirement needs and those of your employees. Yaegers Financial Services can help you do just that. Contact us today to see if a Qualified Retirement Plan is a good option for your business or if your current plan is cost-effective and meeting all of your needs.
Is a Safe Harbor 401(k) right for your business?
The allure of a safe harbor plan is that it is exempt from the ADP and ACP tests which are two nondiscrimination tests that 401(k) plans must satisfy every year. The safe harbor plan can simplify the administration of a 401(k) plan while also being a great recruiting tool for any employer. This type of 401(k) plan gives the employer two options for making contributions to employees’ accounts. Under either option, the contributions are fully vested.
- Matching Option: The employer matches dollar for dollar the first 3% of pay an employer defers, plus 50 cents per dollar on the next 2% of pay the employee defers.
- Nonelective Option: The employer contributes 3% of pay for all eligible employees whether or no they contribute themselves.
