Small Business Retirement Plans in Clarkson Valley, MO. Offering a retirement plan to your Clarkson Valley, MO employees is a great way to retain talent, incentivize higher performance, and get those much-needed tax reductions. While the benefits may be obvious, the difficulties of establishing 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 do I do 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 Clarkson Valley, MO financial planners is dedicated to helping business owners and their employees get the most out of having a sound retirement plans and understanding the ins-and-outs of federal regulations. For anything from initial setup and employee education to making annual adjustments, call Correct Capital today at 877-930-4015 or contact us through our website.
What Types of Retirement Plans Can Small Businesses Open in Clarkson Valley, MO?
The federal government and various financial institutions offer different plans and accounts for small business owners and their employees to better prepare for retirement. Depending on the specifics of your business, you may open any of the following:
- SEP-IRA — This type of individual retirement account is available to owner-only businesses, freelancers, and businesses with very few employees. It functions similarly to a traditional IRA, where contributions are tax-deductible, and distributions are taxed as income. The maximum contribution in a given year is the lessor of 25% of an employee's yearly earnings or $66,000 (as of 2023). Employers are required to contribute an equal percentage of compensation to their own, however the contributions are tax-deductible.
- SIMPLE IRA — "SIMPLE" stands 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 is relatively inexpensive for employers as the set-up is fairly inexpensive.
- Personal Defined Benefit Plan — This plan is reserved for business with no non-owner employees, or employers with up to 5 employees. With this plan, you target how much they would like to have in retirement, and contribution limits are modified annually based on their desired income, age, salary, and tenure with the company. While this plan allows for high contributions and a plan tailored to each individual, there may be costs and fees.
- Business 401(k) Plan — 401(k)s are a workplace savings plan that offers tax incentives and allows employees to invest savings so the money can benefit them later. Employees pick a percentage of their compensation to be contributed, and investments are often held in mutual funds. Most 401(k) plans come with significant tax planning benefits for both employers 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 businesses made up only of an owner or of spouses. A maximum contribution level is set each year, and you can contribute a set percentage of your income or, if self-employed, an amount taking into account your earned income and deducting half of self-employment tax paid and contributions made by you over the course of the year. You may also decide 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 better suited to you will depend on the nature of your business and your employees' needs. Different retirement have different tax benefits, expenses, required minimum distributions, contribution limits, and more. A prudent financial advisor like our team 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 Clarkson Valley, MO
The particular, financial-based advantages to your Clarkson Valley, 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. Over half of workers responded to a survey saying it is a "very important" factor in job satisfaction, while employers also get tax breaks and can better attract and motivate employees. Companies and employees will both enjoy:
Employee Benefits
- More financial security in retirement
- Reduced taxable income
- Contributions are simple with salary deferral
- They do not pay taxes on money they put in or investments gains until distributed
- Over the years small savings grow into considerable sums of money
- Ability to perform a 401(k) rollover if it's beneficial down the road
Business Benefits
- 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 Clarkson Valley, MO to Assist With My Small Business Retirement Plan?
Creating small business retirement plans is complicated. While the federal government does not currently obligate any company to offer a retirement plan to workers, certain states require employers with a minimum number of employees to have a retirement plan. Clarkson Valley, MO retirement consultants that are experienced in 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 Clarkson Valley, MO retirement plan consultants for your small business, our financial planners will:
- Help you choose which plan works best for you and your employees, and which financial institution should hold the assets
- Assist you in setting up your plan, including adopting a written plan, establishing a trust for plan assets, helping employees understand the plan's terms, and developing a record keeping system
- Help you operate your plan by staying compliant with relevant 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 important aspect of their continued financial health
Correct Capital's Clarkson Valley, MO advisors hold ourselves to the fiduciary standard, meaning we are obligated, by law and by regulatory oversight to only offer advice based on what we believe is in your best interest. As an independent firm, we have the freedom and flexibility to tailor our offerings to best suit the goals of our clients. Request a consultation with a member of our advisor team today.
Other services we offer in Clarkson Valley, MO 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 Clarkson Valley, MO | Correct Capital
Owning a small business comes with a mountain of moving parts and tasks to ensure things run smoothly — setting up and maintaining a small business retirement plan shouldn't 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* nationwide. 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
