Small Business Retirement Plans in St. Louis. Setting up a retirement plan for you and your St. Louis employees is a great way to retain talent, boost performance, and get those much-desired tax breaks. While the benefits may be clear, the complexities of setting up and maintaining small business retirement plans are not. What type of plan is best for your business? What federal regulations do I have to follow? What happens when I want to change plans, or if I'm closing my business? Correct Capital's team of St. Louis financial planners has over 70 years of combined experience helping business owners and their employees get the most out of their retirement plans and navigate the complexity of financial law. For anything from initial setup and employee education to making annual adjustments, call Correct Capital today at 314-930-401K or contact us online.
What Types of Retirement Plans Are Available to Small Businesses in St. Louis?
The federal government and various financial custodians offer different plans and accounts for small business owners and their employees to better prepare for retirement. Among the most common are:
- SEP-IRA — This type of individual retirement account is available to owner-only businesses, freelancers, and businesses with very few employees. It follows the same rules as a traditional IRA, where the money put into the account grows tax-deferred. Contributions are limited to 25% of an employee's compensation or $66,000 (as of 2023), whichever is less. Employers can deduct contributions they make on behalf of their employees.
- SIMPLE IRA — "SIMPLE" stands for "Savings Investment Match Plan for Employees," and these IRAs are for businesses with up to 100 employees. Employees can fund their own accounts through salary deferrals, and employers can also contribute. This plan is low-cost as it's mainly funded by employees, and their contributions can be deducted as a business expense.
- Personal Defined Benefit Plan — This plan is strictly for owner-only businesses, or those with up to 5 employees. With this plan, you target a desired level of retirement income, and contribution limits are adjusted each year based on that, with a maximum limit set each year. While this plan is highly customizable and allows for significant contributions, there may be startup costs and annual fees.
- Business 401(k) Plan — 401(k)s are available to private companies of any size, and are highly customizable. Employees may defer their salary as contributions, and employers can make annual contributions. Most 401(k) plans come with significant tax planning advantages for both businesses and employees. They can include:
- Traditional 401(k)s
- Profit-sharing plans
- Safe Harbor 401(k)s
- Automatic enrollment 401(k)s
- Individual 401(k) — Also known as an i401(k), this plan is aimed at offering similar benefits to a business 401(k), but for people who are self-employed, or whose only employee is a spouse. You can contribute up to the annual 401(k) limit each year, and the employer may make a nonelective contribution up to 25% of compensation or, if self-employed, an amount considering your earned income and deducting half of self-employment tax paid and contributions made by you over the course of the year. You can choose to open a Roth 401(k) account, or roll over pre-tax assets.
There are pros and cons to each plan, and which may be "best" for you will depend on your business and your and your employees' needs. Different plans and accounts have different tax benefits, fees, required minimum distributions, contribution limits, and more. A reputed financial advisor like those at Correct Capital will be able to help you determine which plan works best for you and your team.
Benefits of Setting Up a Small Business Retirement Plan in St. Louis
The specific, financial-based benefits for your St. Louis retirement plan will largely be based on the specific plan you choose. However, there are many general benefits of setting up a small business retirement plan for both businesses and workers. 60% of employees say that a retirement plan is a "very important" factor in job satisfaction, while employers reap the benefits both during tax season and in office productivity. Below are some of the main benefits for both businesses and employees of setting up a small business retirement plan:
- Improved financial security in retirement
- Reduced taxable income
- Contributions can be easily made through payroll deductions
- Contributions and investment gains are not taxed until distributed
- As interest accrues, small contributions grow into significant savings
- Ability to perform a 401(k) rollover if they change employers
- Attract, recruit, and retain talent
- Promote great work ethic
- Employer contributions are tax-deductible
- Flexible plan options to fit your plan to your needs
- Tax credits that can help reduce startup costs
Do I Need a Financial Advisor in St. Louis to Help With My Small Business Retirement Plan?
Setting up small business retirement plans is not the same thing as setting up a personal savings plan at your local St. Louis bank. While the federal government does not currently require any business to offer a retirement plan to employees, certain states require employers of a certain size to offer access to a retirement plan. St. Louis retirement consultants that are experienced in helping business owners set up retirement plans are usually needed to not only make sure you and your employees get the most out of your plan, but that you follow ever-changing tax and business laws.
As your St. Louis retirement plan consultants for your small business, our team will:
- Help you choose which plan works best for you and your employees, and the right custodian to hold plan assets
- Assist you in establishing your plan, including adopting a written plan, arranging a trust for plan assets, helping employees understand the plan's terms, and creating a record keeping system
- Help you operate your plan by keeping up-to-date with applicable laws, managing the plan's assets, and distributing benefits
- Help you educate your employees on your plan, its benefits, and how it can serve as a component to their ongoing financial success.
Correct Capital's St. Louis financial planners are fiduciary advisors, meaning we are legally and ethically bound to do what's best for you and your employees. The only product we offer is trust. We work for you, and not our own firm. Schedule a meeting with a member of our advisor team today to learn more about what we can do for you.
Small Business Retirement Plans in St. Louis | Correct Capital
Owning and operating a small business comes with a mountain of daily, monthly, and annual tasks to ensure things run smoothly — setting up and maintaining a small business retirement plan doesn't have to be one of them. Correct Capital currently manages over 30 plans in both small and large companies, and represents over $230 million in total plan assets* across the United States. To set up a retirement plan for your small business, or learn what other services we offer to business owners, call Correct Capital today at 314-930-401K or contact us online.
*as of January 2022