CHARLESTON, SC--- Choosing the best suited retirement plan for your small business can seem like a daunting task. However, by first determining what you want to accomplish by implementing a retirement plan we can then filter out the characteristics of your business to determine the best plan for you.
Today, I’m going to go through a few of the main retirement plans and discuss what type of business owner should use each plan, and why.
SEP IRA- Simplified Employee Pension
# of Employees: 1 (owner) and maybe spouse
Deferrals/Contributions: $54,000 or 25% of income (whichever is less)
# of Employees: This is a 401k for business owners, spouses in the business and partners only; Non-related employees cannot participate
Deferrals/Contributions: Up to $18,500 in employee salary deferrals; $55,000 max from employee deferrals and employer contributions; $6,000 catchup for 50+ year-olds
SIMPLE IRA- Savings Incentive Match Program for Employees
# of Employees: 2-100, who earn at least $5,000/year
Same as SIMPLE IRA Except:
# of Employees: Not Applicable
Safe Harbor 401(k)
Same as Traditional 401(k) Except:
So, there’s a simple breakdown of many of the popular retirement plans that small businesses utilize. Of course, there are many other rules and regulation I did not cover to keep things concise and less cumbersome to read. Further, there are other retirement plans out there that may be best suited for your unique business. If you’re still not sure which plan would best fit your business, give us a call, fill out a contact form, or email us to schedule a free consultation to determine the best move for you.
Low Fee 401k