Small Business Retirement Plans in Fairview Heights, IL. Establishing a retirement plan for you and your Fairview Heights, IL employees is a great way to retain talent, boost performance, and get those much-desired tax reductions. However, many business owners understandably have questions about small business retirement plans. What type of plan is best for your business? What are the different laws I'll have to follow? 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 Fairview Heights, IL financial planners has over 70 years of combined experience helping business owners and their employees reap the rewards of their retirement plans and understanding the specifics of their individual plans and benefits. Whether you're interested in modifying an existing plan or need to set up a plan, 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 Fairview Heights, IL?
Uncle Sam and various 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 business with no non-owner employees, or those with very few employees. It follows the same rules as 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" 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 strictly for business with no non-owner employees, or businesses with up to 5 employees. With this plan, an employee targets 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 allows for high contributions and a plan tailored to each individual, you will have to pay annual fees.
- Business 401(k) Plan — 401(k)s can be opened by private companies of any size, and are highly customizable. There are annual contribution limits. Most 401(k) plans offer considerable tax planning advantages for both employers and employees. 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 a Solo 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 the employer may make a nonelective contribution up to 25% of income 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 may also decide to open a Roth 401(k) account, or roll over pre-tax assets.
Each plan has its own benefits and drawbacks, and it's impossible to say which is "best" for you without knowing your specific situation. Different accounts have different tax breaks, expenses, required minimum distributions, limits on how much you can put in each year, and more. An experienced financial advisor like ours here at Correct Capital will be able to help you determine which plan works best for you and your team.
Why You Should Set Up a Small Business Retirement Plan in Fairview Heights, IL
The specific, financial-based advantages to your Fairview Heights, IL small business retirement plan is dependent upon which plan you set up. That said, a small business retirement plan, whichever one you choose, benefit employers and employees in the same way. Three out of five workers say that a retirement plan 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 payroll deductions
- They do not pay taxes on contributions or how the money grew until distributed
- As interest accrues, small contributions grow into significant sums of money
- Ability to perform a 401(k) rollover if it's beneficial down the road
Business Benefits
- Attract, recruit, and retain high performers
- Promote great work ethic
- Deduct your taxable income from your taxable profits
- 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 Fairview Heights, IL to Help With My Small Business Retirement Plan?
Creating small business retirement plans is complicated. While the federal government does not currently obligate any business to offer retirement savings options to workers, certain states require employers with a minimum number of employees to offer access to a retirement plan. Fairview Heights, IL retirement consultants that have spent years helping business owners set up 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 Fairview Heights, IL retirement plan consultants for your small business, our advisers will:
- Help you decide which plan works best for you and your employees, and which financial institution should house the assets
- Assist you in setting up your plan, including creating a document that complies with IRS code, establishing 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 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 Fairview Heights, IL financial planners are fiduciary advisors, meaning we are obligated, by law and by ethics to do what's best for you and your employees. The only product we offer is trust. Request a meeting with a member of our advisor team today.
Other services we offer in Fairview Heights, 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 Fairview Heights, IL | Correct Capital
Owning 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, speak to a financial advisor at Correct Capital today at 314-930-401K or contact us through our website.
*as of January 2022
