Small Business Retirement Plans in Belleville, IL. Starting up a retirement plan for you and your Belleville, IL employees offers a variety of benefits, including tax reductions and a great way to attract and retain your highest-performing workers. However, many business owners understandably have questions about small business retirement plans. What type of plan is best for your business? What are the different laws I'll have to follow? What do I do when a new plan seems like a better option, or if I'm closing my business? Correct Capital's team of Belleville, IL financial planners is dedicated to helping business owners and their employees get the most out of their retirement plans and understanding the complexity of their individual plans and benefits. For anything from initial setup and employee guidance to fine-tuning an existing plan, speak to a financial advisor at Correct Capital today at 314-930-401K or contact us through our website.
What Types of Retirement Plans Can Small Businesses Open in Belleville, IL?
Types of retirement plans vary; some only apply to businesses of a certain size, while some differ other areas such as employer contributions. Depending on the specifics of your business, you may open any of the following:
- SEP-IRA — A "Simplified Employee Pension" is a type of individual retirement account that is available to owner-only businesses, people who do freelance work, and businesses with very few employees. It functions similarly to a traditional IRA, where contributions are tax-deductible, and distributions are taxed as income. Contributions are limited to 25% of an employee's compensation or $66,000 (as of 2023), whichever is less. Employers are required to contribute an equal percentage of compensation to their own, however the contributions are tax-deductible.
- SIMPLE IRA — "SIMPLE" is an acronym for "Savings Investment Match Plan for Employees," and these IRAs are for businesses with up to 100 employees. Employers can contribute 2% of an employee's paycheck, or dollar-to-dollar match an employee's contribution up to 3%.. This plan is low-cost as it's mainly funded by employees, and employer contributions can be deducted as a business expense.
- Personal Defined Benefit Plan — This plan is only available to business with no non-owner employees, or employers with no more than 5 employees. With this plan, you target a desired level of retirement income, and contribution limits are modified annually based on that, with a maximum limit set each year. While this plan is highly customizable and allows for significant contributions, you will be subject to startup costs.
- Business 401(k) Plan — 401(k)s can be opened by private companies of any size, and are highly customizable. Employees pick a percentage of their compensation to be contributed, and investments are often held in mutual funds. Most 401(k) plans come with considerable tax planning advantages for both companies and workers. Common types of 401(k) plans include:
- Traditional 401(k)s
- Profit-sharing plans
- Safe Harbor 401(k)s
- Automatic enrollment 401(k)s
- Individual 401(k) — Also referred to as an i401(k), this plan functions similarly to a business 401(k), but only for owner-only businesses, or businesses where the only employee is a spouse. A maximum contribution level is set each year, and you can contribute a set percentage of your income or, if self-employed, an amount calculated by looking at 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.
Each plan has its own advantages and drawbacks, and which may be "best" for you will depend on the nature of your business and your employees' needs. Different plans have varying tax breaks, costs, required minimum distributions, limits on how much you can put in each year, and more. A prudent financial advisor like ours here at Correct Capital will review your options and guide you in choosing the best retirement plan for your small business.
Benefits of Setting Up a Small Business Retirement Plan in Belleville, IL
The particular, financial-based advantages to your Belleville, IL small business retirement plan will largely be based on the specific plan you set up. That said, there are many general benefits of setting up a small business retirement plan for both businesses and workers. Over half of employees responded to a survey stating it 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 establishing a small business retirement plan:
Employee Benefits
- Better financial security in retirement
- Reduced taxable income
- Contributions are simple with payroll deductions
- Contributions and investment gains are not taxed until they take them out
- As interest accrues, small contributions grow into considerable sums of money
- Ability to perform a 401(k) rollover if they change employers
Business Benefits
- Attract, recruit, and retain your best employees
- Incentivize based on performance-based employer contributions
- Employer contributions are tax-deductible
- Flexible plan options to fit your plan to your needs
- Tax credits that can help reduce startup costs
Why Should I Consult With a Financial Advisor in Belleville, IL to Help With My Small Business Retirement Plan?
Setting up small business retirement plans is not the same thing as setting up a personal account at your local Belleville, IL bank. While the federal government does not currently obligate any company to offer a retirement plan to employees, some states require businesses of a certain size to offer access to a retirement plan. Belleville, IL retirement consultants that have spent years helping business owners create retirement plans are usually needed to not only make sure the plan is right for you, but that you abide by evolving tax and business laws.
As your Belleville, IL retirement plan consultants for your small business, our advisers will:
- Help you choose which plan works best for you and your employees, and which financial institution should house the 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 adapting as we need to to applicable laws, managing the plan's assets, and distributing benefits
- Help educate your employees on your plan, its benefits, and how they can use it as a component to their continued financial health
Correct Capital's Belleville, IL advisors hold ourselves to the fiduciary standard, meaning we are obligated, by law and by regulatory oversight to do what's best for you and your employees. As an independent firm, we have the freedom and flexibility to tailor our offerings to best suit the goals of our clients. Schedule a meeting with a member of our advisor team today.
Other services we offer in Belleville, IL include:
- Succession Planning
- Fiduciary Financial Advisor
- Company 401(k) Plans
- ESOP Advisor
- Self-Employed Retirement Plans
- 401(k) For Small Business
- Tax Planning
- Social Security Consultants Near Me
Small Business Retirement Plans in Belleville, IL | Correct Capital
Owning a small business involves a mountain of moving parts and 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* throughout the country. To set up a retirement plan for your small business, or learn what we can do for business owners, speak to a financial advisor at Correct Capital today at 314-930-401K or contact us online.
*as of January 2022
