Small Business Retirement Plans in Clayton, MO. Establishing a retirement plan for you and your Clayton, MO employees is a great way to retain talent, incentivize higher performance, and get those much-desired tax reductions. However, many business owners understandably have questions about small business retirement plans. What benefits do different kinds of plans provide? What are the different laws that apply to different plans? What happens when I want to change plans, or if I'm retiring and my business will no longer be running? Correct Capital's team of Clayton, MO financial planners is dedicated to helping business owners and their employees reap the benefits of having a sound retirement plans and navigate the ins-and-outs of their individual plans and benefits. Whether you're interested in modifying an existing plan or are looking to create an entirely new one, 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 Clayton, MO?
Types of retirement plans vary; some only apply to businesses of a certain size, while some differ other areas such as employer contributions. 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 business with no non-owner employees, or those 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 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 frequently thought of as "start-up" retirement savings plans for smaller businesses that do not yet offer a plan. Contributions are made through salary deferrals and employer contributions. This is relatively inexpensive for employers as employees usually make the majority of the contribution, and employer contributions can be deducted as a business expense.
- Personal Defined Benefit Plan — This plan is reserved 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 modified annually based on their desired income, age, salary, and tenure with the company. While this plan is highly customizable and allows for significant contributions, there may be startup costs.
- Business 401(k) Plan — 401(k)s are a workplace savings plan that offers employees tax breaks for contributions and investment opportunities. 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 advantages for both businesses and workers. They can include:
- Individual 401(k) — Also known as a One-Participant 401(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. 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 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 there's no telling what's "best" for you without knowing your specific situation. Different accounts have varying tax breaks, expenses, required minimum distributions, maximum contributions, and more. A prudent financial advisor like ours here 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 Clayton, MO
The specific, financial-based benefits for your Clayton, 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, benefit employers and employees in the same way. 60% of employees 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:
- Improved 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 investments gains until they take them out
- Over the years small savings grow into significant savings
- Ability to conduct a 401(k) rollover if they change employers
- Attract, recruit, and retain talent
- Promote great work ethic
- Deduct your taxable income from your taxable income
- Highly customized plans are available
- Tax credits upon initial set-up
Why Should I Consult With a Financial Advisor in Clayton, MO to Assist With My Small Business Retirement Plan?
Opening small business retirement plans is not the same thing as setting up a personal savings plan at your local Clayton, MO bank. While the federal government does not currently obligate any business to offer a retirement plan to employees, certain states require businesses with a certain number of employees to have a retirement plan. Clayton, MO retirement consultants that have spent years helping business owners create retirement plans are usually needed to not only make sure you get the benefits you're looking for, but that you abide by ever-changing tax and business laws.
As your Clayton, MO retirement plan consultants for your small business, our team will:
- Help you decide which plan works best for you and your employees, and which financial institution should hold the assets
- Assist you in establishing your plan, including adopting a written plan, establishing a trust for plan assets, helping employees understand the plan's terms, and implementing a record keeping system
- Help you operate your plan by keeping up-to-date with 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 Clayton, MO advisors hold ourselves to the fiduciary standard, meaning we are legally and ethically obligated 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. Schedule a meeting with a member of our advisor team today.
Other services we offer in Clayton, MO include:
- 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
- Retirement Calculator
- Retirement Planning
Small Business Retirement Plans in Clayton, MO | Correct Capital
Operating a small business involves a plethora 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* nationwide. 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