Small Business Retirement Plans in Columbia, IL. Setting up a retirement plan for you and your Columbia, IL employees is a great way to retain talent, incentivize higher performance, and get those much-needed tax breaks. While the benefits may be clear, the complexities of setting up and maintaining small business retirement plans are not. What benefits do different kinds of plans provide? What federal regulations do I have to follow? What do I do when I want to change plans, or if I'm closing my business? Correct Capital's team of Columbia, IL financial planners is committed to helping business owners and their employees get the most out of their retirement plans and understanding the ins-and-outs of their individual plans and benefits. For anything from initial setup and employee education to making annual adjustments, speak to a financial advisor at Correct Capital today at 314-930-401K or contact us online.
What Types of Retirement Plans Are Available to Small Businesses in Columbia, IL?
Types of retirement plans vary; some only apply to businesses of a certain size, while some differ other areas such as when plan participants enjoy tax benefits. Depending on your specific needs, you may open any of the following:
- 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. You cannot contribute more than 25% of an employee's yearly earnings or $66,000 (as of 2023), whichever is less. Employers can deduct contributions they make on behalf of their employees.
- SIMPLE IRA — "SIMPLE" is an acronym for "Savings Investment Match Plan for Employees," and these plans are often thought of as "start-up" retirement savings plans for smaller businesses that do not yet offer a plan. Employers can contribute 2% of an employee's compensation, or dollar-to-dollar match an employee's contribution up to 3%.. This plan is low-cost as the set-up is fairly inexpensive.
- Personal Defined Benefit Plan — This plan is strictly for business with no non-owner employees, or those with no more than 5 employees. With this plan, you target how much they would like to have in retirement, and contribution limits are adjusted 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, you will be subject to costs and fees.
- 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 offer significant 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 a One-Participant 401(k), this plan is aimed at offering similar benefits 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 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 can choose to open a Roth 401(k) account, or roll over pre-tax assets.
Each plan has its own advantages and drawbacks, and there's no telling what's "best" for you without knowing your specific situation. Different accounts have different tax advantages, costs, required minimum distributions, maximum contributions, and more. A reputed financial advisor like those at Correct Capital will review your options and help you in choosing the best retirement plan for your small business.
Why You Should Set Up a Small Business Retirement Plan in Columbia, IL
The specific, financial-based advantages to your Columbia, IL small business retirement plan is dependent upon which plan you set up. However, a small business retirement plan, whichever one you choose, has universal benefits. Three out of five workers say that a retirement plan is a "very important" factor in how good they feel at their present employment, while employers also get tax breaks and can better attract and motivate employees. Companies and employees will both enjoy:
Employee Benefits
- Better financial security in retirement
- Reduced taxable income
- Contributions can be easily made through payroll deductions
- They do not pay taxes on money they put in or investments gains until they withdraw them
- Over the years 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 Columbia, IL to Assist With My Small Business Retirement Plan?
Creating small business retirement plans is far different from setting up a personal savings plan at your local Columbia, IL bank. While the federal government does not currently require any company to offer a retirement plan to employees, certain states require employers of a certain size to have a retirement plan. Columbia, IL retirement consultants that have spent years helping business owners open 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 Columbia, IL retirement plan consultants for your small business, our advisers will:
- Help you elect the best plan for you, and the right custodian to hold plan 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 developing 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 it can serve as a component to their ongoing financial health
Correct Capital's Columbia, IL 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. Schedule a consultation with a member of our advisor team today.
Other services we offer in Columbia, 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 Columbia, IL | Correct Capital
Owning a small business involves 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* across the United States. 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
