Setting up a small-business retirement plan is a great option for your employees as well as your business. The plan that is best for your business will ultimately depend on the size of your business and the benefits it provides you and your employees. Here are five of the most common retirement plans that are best for small businesses:
1) MyRA Plan
MyRA is a special Roth IRA account designed for those that can only afford small monthly contributions. These retirement plans have very simple financial terms and the minimum deposit amount is only $25 per employee. They are Roth IRA accounts which mean employee contributions are made with money earned after taxes and there is absolutely no cost to employers.
Simplified Employee Pension Plans offer an easy way for small business owners to save for retirement, and they are one of the easiest accounts to set up and maintain. All contributions made to a SEP plan are made by the employer. These retirement plans are great because they allow small business owners to put a lot of money aside for retirement with very little paperwork or fees.
3) SIMPLE IRA
Savings Incentive Match Plans for Employees (SIMPLE IRAs) IRAs are great retirement plan options for small businesses with less than 100 employees. These retirement plans allow employees to set aside money they can use for investments to grow their retirement. They also have smaller contributions contribution limits than a 401(k) and other tax-deferred retirement plans.
4) SIMPLE 401(k)
SIMPLE 401(k) plans are very similar to SIMPLE IRA plans in terms of contribution rules, but one of the biggest differences is that SIMPLE 401(k) plans allow loans to be made. This can be a very attractive benefit for employees that need money from their retirement plans when they are unable to receive distributions from their retirement account. Besides this, both plans have most of the same contribution and distribution rules.
5) Defined Benefit Plan
A Defined Benefit Plan is a retirement plan where employee benefits are determined by several factors such as income, length of employment and salary history. These plans are labeled “defined” because the formula for calculating retirement benefits are determined ahead of time. These retirement plans offer a fixed benefit tied to an employee’s salary, and they are especially rewarding for high-income professionals.
Contact us for expert advice on which retirement plan options are best for you and your business.