Retirement Plans For Small Business
Retirement Plans for Small Businesses
If you're self-employed or own a small business and you haven't established a retirement savings plan, what are you waiting for? A retirement plan can help you and your employees save for the future. And you'll be in good company--over 1 million small businesses with 100 or fewer employees currently offer workplace retirement savings plans.
A retirement plan can have significant taxadvantages:
• Your contributions are deductible when made
• Your contributions aren't taxed to an employee until distributed from the plan
• Money in the retirement program grows tax deferred (or, in the caseof Roth accounts,potentially taxfree)
• You may be able to claim a tax credit equal to 50% of the cost to set up and administer a retirement plan, up to a maximum of $500 per year for each of the first three years of the plan.
• Certain low- and moderate income employees may be entitled to a tax credit ("saver's tax credit") for a portion of their contributions to the plan
Retirement plans are usuallyeither IRA-based (like SEPs and SIMPLE IRAs) or "qualified" (like 401(k)s, profit-sharing plans, and defined benefit plans). Qualified plans are generallymore complicated and expensive to maintain than IRA-based plans because they have to comply with specific Internal Revenue Code and ERISA (the Employee Retirement Income Security Act of 1974) requirements in order to qualify for their tax bene- fits. Also, qualified plan assets must be held either in trust or by an insurance company. With IRA-based plans, your employees own(i.e., "vest" in) your contributions immediately. With qualified plans, you can generally require that your
employees work a certain numbers of years before they vest.
Which plan isrightfor your business?
With a dizzying array of retirement plans to choose from, each with unique advantages and disadvantages, you'll need to clearly define your goals before attempting to choose a plan.
For example, do you want:
• To maximize the amountyoucan save foryour own retirement?
• A plan funded by employer contributions? By employee contributions?Both?
• A plan that allows you and your employees to make pretax and/orRoth contributions?
• The flexibility to skip employer contributions in some years?
• A plan with thelowest cost? Easiest administration?
The answers to these questions can help guideyou andyour retirement professional to the plan (or combination of plans) most appropriate for you.
Disclosure Information -- Important -- Please Review
Securities products and financial planning services are offered through registered representatives and financial planners, respectively, of New England Securities Corp. (NES), a broker-dealer (member FINRA/SIPC) and a Registered Investment Adviser, Boston, MA 02116. Baystate Financial Services is a separate entity of NES. L0309025216[exp0313][CT,MA,ME,NH,RI]