Small Business Retirement Plans in Central West End, MO. Offering a retirement plan to your Central West End, MO employees is a great way to retain talent, boost performance, and get those much-desired tax breaks. However, many business owners understandably have questions about small business retirement plans. What benefits do different kinds of plans provide? What federal regulations do I have to follow? What happens when a new plan seems like a better option, or if I'm retiring and my business will no longer be running? Correct Capital's team of Central West End, MO financial planners is dedicated to helping business owners and their employees get the most out of having a sound retirement plans and navigate the complexity of their individual plans and benefits. For anything from initial setup and employee education to fine-tuning an existing plan, speak to a financial advisor at Correct Capital today at 877-930-4015 or contact us online.
What Types of Retirement Plans Can Small Businesses Open in Central West End, MO?
The federal government and different financial custodians offer different plans and accounts for small business owners and their employees to better prepare for retirement. Among the most common small business retirement plans are:
- SEP-IRA — A "Simplified Employee Pension" is a type of individual retirement account that is available to self-employed business owners with no employees, people who do freelance work, and businesses with very few employees. It follows the same rules as 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 employees as to their own, however the contributions are tax-deductible.
- SIMPLE IRA — "SIMPLE" is an acronym for "Savings Investment Match Plan for Employees," and these individual retirement accounts 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 employer contributions can be deducted as a business expense.
- Personal Defined Benefit Plan — This plan is reserved for business with no non-owner employees, or employers with no more than 5 employees. With this plan, an employee decides on how much they would like to have in retirement, and contribution limits are adjusted each year based on that, with a maximum limit set each year. While this plan allows for high contributions and a plan tailored to each individual, there may be startup costs.
- Business 401(k) Plan — 401(k)s are available to 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 benefits 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 referred to as an Owner-Only 401(k), this plan has many of the same rules and benefits as 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 you can contribute a set percentage of your compensation 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.
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 retirement have varying tax advantages, costs, required minimum distributions, limits on how much you can put in each year, and more. A reputed financial advisor like those at Correct Capital will review your options and aid you in choosing the best retirement plan for your small business.
Why You Should Set Up a Small Business Retirement Plan in Central West End, MO
The specific, financial-based benefits for your Central West End, MO small business retirement plan will largely be based on the specific plan you choose. However, a small business retirement plan, whichever one you choose, has universal benefits. 60% of workers 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 setting up a small business retirement plan:
Employee Benefits
- More financial security in retirement
- Tax deductions
- Contributions can be easily made through payroll deductions
- They do not pay taxes on money they put in or how the money grew until they take them out
- As interest accrues, small savings grow into considerable savings
- Ability to perform a 401(k) rollover if it's beneficial down the road
Business Benefits
- Attract, recruit, and retain high performers
- Incentivize based on performance-based employer contributions
- Employer contributions are tax-deductible
- Flexible plan options to fit your plan to your needs
- Tax credits upon initial set-up
Why Should I Consult With a Financial Advisor in Central West End, MO to Help With My Small Business Retirement Plan?
Setting up small business retirement plans is complicated. While the federal government does not currently require any company to offer retirement savings options to workers, certain states require employers with a certain number of employees to offer access to a retirement plan. Central West End, MO retirement consultants that have spent years helping business owners open retirement plans are usually needed to not only ensure you and your employees get the most out of your plan, but that you follow ever-changing tax and business laws.
As your Central West End, MO retirement plan consultants for your small business, our financial planners will:
- Help you decide which plan works best for you and your employees, and the right custodian to hold plan assets
- Assist you in setting up your plan, including creating a document that complies with IRS code, arranging a trust for plan assets, helping employees understand the plan's terms, and implementing a record keeping system
- Help you operate your plan by adapting as we need to to relevant laws, managing the plan's assets, and distributing benefits
- Help educate your employees on your plan, its benefits, and how it can serve as a part of their continued financial success
Correct Capital's Central West End, MO advisors hold ourselves to the fiduciary standard, meaning we are legally and ethically obligated to only work in your best interest. We work for you, and not our own firm. Request a consultation with a member of our advisor team today.
Other services we offer in Central West End, MO include:
- Succession Planning
- Fiduciary Financial Advisor
- Company 401(k) Plans
- ESOP Advisor
- Self-Employed Retirement Plans
- 401(k) For Small Business
- Tax Planning
Small Business Retirement Plans in Central West End, MO | Correct Capital
Operating a small business comes with a plethora of daily, monthly, and annual tasks to ensure things run smoothly — navigating the complexities of a small business retirement plan shouldn't be one of them. Correct Capital currently manages over 30 plans for a variety of types of businesses, 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, call Correct Capital today at 877-930-4015 or contact us through our website.
*as of January 2022
