Retirement Plans
The following are the general types of retirement plans that we work with.
| DEFINED CONTRIBUTION PLANS |
| Retirement plans in which contributions are made by the employer, employee, or both. The final payout depends on how much is invested and the success of the investments. |
| 401(k) Plan - Plan that allows workers to make voluntary, tax-deductible contributions to the plan up to certain limits; contributions may be matched by the employer. These plans are also called salary reduction plans. |
| ESOP - An Employee Stock Ownership Plan is a plan whose contributions consist mainly of the stock of the employer company. The value of ESOP benefits is determined by how well the stock of a company does. |
| Money Purchase Plan- Plan that provides for the employer to make a fixed annual contribution to the plan, for example, a percentage of a workers compensation. |
| Profit-Sharing Plan - Plan that bases contributions on business profits or a percentage of pay. "Discretionary profit sharing" plans generally allow employers to decide each year whether to contribute. |
| PENSION PLANS FOR SMALL BUSINESSES |
| Keogh Plan - Plan that allows self-employed persons to set aside tax deductible sums in pension accounts for themselves and their employees. |
| SEP- A Simplified Employee Pension is a defined contribution pension plan that does not have the same reporting and disclosure requirements as more complicated plans. |
| SIMPLE - Savings Incentive Match Plan for Employees of small employers with 100 or fewer employees. The employees contribute a percentage of their salary up to certain limits, and the employer either matches that or contributes 2% of the employees' wages. |
| DEFINED BENEFIT PENSION PLAN |
| Plan that promises a certain benefit at retirement, usually calculated through a formula based on a combination of years of service and amount of pay. Money is paid into the plan for all participating employees, but some will not qualify for, and therefore will not get, benefits. The employer assumes the investment risk. |
If you're not familiar with retirement plans, a 401K plan is a tax deferred investment plan that employees can contribute to in order to save for their own retirement.
Employees can contribute any percentage of income they desire up to the IRS dollar limitations ($15,000 for 2006 or $20,000 if age 50 or older.) The contributions and earnings can grow tax deferred until withdrawal, which is usually at retirement.
Retirement Plans to Attract Top Talent
Retirement plans are almost a necessity to attract top talent. Offering 401k plans allows your employees to save and invest for their own retirement, instead of the company investing for them.
Often, small businesses, already overburdened by high operating costs and small staffs, prefer to work with a third party administrator (TPA) to handle many of the administrative aspects of the plan. Bundled retirement plans that include plan recordkeeping services remove a lot of the trouble associated with businesses having to find their own recordkeeper or handling such plan administration themselves.
If you choose a 401k retirement plan, it's helpful to find a turnkey plan that provides a comprehensive package that costs little to administer and offers flexibility for when your company grows. A plan that offers a wide range of investment products is desirable for employees so they can make their own investment choices.
For more details, contact us today or take the online tour.
