Your Option of 4 Small Business Retirement Plans

If you are looking at small business retirement plans, there are several different plans to choose from. In order to choose the best plan for your company and employees, you need to research all of the plans that are available. Here are a few small business retirement plans that you might want to consider.

1. 401k 

Traditionally, most people think of 401ks being reserved for large businesses. However, in today's market, this is no longer the case. With so many different 401k providers competing for business, prices for this type of plan continue to decrease. Even if you have 25 employees or fewer, you can find some 401k plans that fit. With this type of retirement account, both employee and employer contributions are allowed. The main drawback to this type of account is that it will usually be more expensive than other options. Managing the 401k will also take more time and paperwork than other retirement account options.

2. SEP IRA

This type of retirement account is one of the most desirable accounts available. There is much less paperwork, and you do not have to file annual statements with the IRS. You can also decide whether you want to contribute to employee accounts on a yearly basis. The expenses to maintain this type of retirement account are traditionally much smaller than for a 401k. Although employees cannot contribute to these accounts, they tend to like them anyway. With the SEP IRA, every employee in the company has to get the same contribution percentage into their accounts as the owner of the company. You can contribute up to a maximum of $49,000 per year into each account.

3. Simple IRA

Another option that you have to consider is the simple IRA. Employees can contribute to this type of retirement account. However, employees cannot contribute as much to their accounts with the simple IRA as they can with other retirement accounts. The maximum amount of money that you can contribute to an account is $11,500. Employers are allowed to contribute to their employees' accounts with a simple IRA. However, they can contribute a maximum of only $4,900 per year.

4. Defined Benefit Plan

Although they are not as popular as they once were, defined benefit plans are still available. Many small companies are still utilizing this type of retirement account. This is a good type of retirement account to consider if you need to catch up on your retirement savings. This type of account has no defined limits as to how much you can contribute. You can contribute as much as needed in order to secure a payout of as much as $195,000 per year. Employees are not eligible to contribute money to this type of account. All of the contributions are provided by the employer.

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