Small Business Retirement Plans in Edwardsville, IL. Establishing a retirement plan for you and your Edwardsville, IL employees is a great way to retain talent, boost 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 are the different laws I'll have to follow? What do I do when I want to change plans, or if I'm retiring and my business will no longer be running? Correct Capital's team of Edwardsville, IL financial planners has over 70 years of combined experience helping business owners and their employees get the most out of having a sound retirement plans and understanding the specifics of their individual plans and benefits. For anything from initial setup and employee guidance to making annual adjustments, call Correct Capital today at 314-930-401K or contact us online.
What Types of Retirement Plans Can Small Businesses Open in Edwardsville, IL?
Uncle Sam and different financial institutions offer different plans and accounts for small business owners and their employees to aid in there retirement planning. Among the most common small business retirement plans are:
- SEP-IRA — This kind of individual retirement account is available to owner-only businesses, freelancers, and businesses with very few employees. It follows the same rules as a traditional IRA, where the money put into the account grows tax-deferred. The maximum contribution in a given year is the lessor of 25% of an employee's compensation 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" is an acronym for "Savings Investment Match Plan for Employees," and these IRAs are for businesses with up to 100 employees. 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 only available to business with no non-owner employees, or those with no more than 5 employees. With this plan, an employee decides on 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, you will be subject to annual fees.
- Business 401(k) Plan — 401(k)s can be established by private companies of any size, and are highly customizable. Employees may defer their salary as contributions, and employers can make annual contributions. Most 401(k) plans offer significant tax planning advantages for both employers 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 known as an Owner-Only 401(k), this plan functions similarly to a business 401(k), but for people who are self-employed, or whose only employee is a spouse. A maximum contribution level is set each year, and the employer may make a nonelective contribution up to 25% of 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 which may be better suited to you will depend on the nature of your business and your employees' needs. Different accounts have varying tax benefits, fees, required minimum distributions, contribution limits, and more. A reputed financial advisor like those at Correct Capital will review your options and guide you in choosing the best retirement plan for your small business.
Why You Should Set Up a Small Business Retirement Plan in Edwardsville, IL
The specific, financial-based advantages to your Edwardsville, IL small business retirement plan is dependent upon which plan you set up. That said, a small business retirement plan, whichever one you choose, has universal benefits. Over half of workers responded to a survey stating it is a "very important" factor in job satisfaction, while employers also get tax breaks and can better attract and motivate employees. Below are some of the main benefits for both businesses and employees of having a small business retirement plan:
- 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 how the money grew until they take them out
- Over the years small savings grow into significant savings
- Ability to conduct a 401(k) rollover if it's beneficial down the road
- 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
Do I Need a Financial Advisor in Edwardsville, IL to Help With My Small Business Retirement Plan?
Opening small business retirement plans is far different from setting up a personal savings plan at your local Edwardsville, IL bank. While the federal government does not currently require any employer to offer a retirement plan to employees, certain states require businesses with a certain number of employees to offer access to a retirement plan. Edwardsville, IL retirement consultants that are experienced in helping business owners open retirement plans are usually needed to not only make sure you get the benefits you're looking for, but that you follow evolving tax and business laws.
As your Edwardsville, IL retirement plan consultants for your small business, our advisers will:
- Help you decide the best plan for you, and the right custodian to hold plan assets
- Assist you in establishing your plan, including adopting a written plan, arranging a trust for plan assets, helping employees understand how specific of the plan apply to their savings, and implementing a record keeping system
- Help you operate your plan by staying compliant with 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 important aspect of their continued financial success
Correct Capital's Edwardsville, IL financial planners are fiduciary advisors, meaning we are legally and ethically bound to only offer advice based on what we believe is in your best interest. The only thing we sell is trust. Request a meeting with a member of our advisor team today.
Other services we offer in Edwardsville, IL include:
- Self-Employed Retirement Plans
- 401(k) For Small Business
- Tax Planning
- Social Security Consultants Near Me
- Retirement Calculator
- Retirement Planning
- Rollover 401(k)
- Wealth Management
- 401k Companies
Small Business Retirement Plans in Edwardsville, IL | Correct Capital
Owning a small business comes with a mountain of daily, monthly, and annual 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 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