Small Business Retirement Plans in Lake St. Louis, MO. Offering a retirement plan to your Lake St. Louis, MO employees is a great way to retain talent, boost performance, and get those much-needed tax reductions. However, many business owners understandably have questions about small business retirement plans. What benefits do different kinds of plans provide? 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 Lake St. Louis, MO 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 education to fine-tuning an existing plan, speak to a financial advisor at Correct Capital today at 314-930-401K or contact us online.
What Types of Retirement Plans Can Small Businesses Open in Lake St. Louis, 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 — This kind of individual retirement account is available to business with no non-owner employees, or those with very few employees. It functions similarly to 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 yearly earnings or $66,000 (as of 2023). Employers are required to contribute an equal percentage of compensation to employees as to their own, however the contributions are tax-deductible.
- SIMPLE IRA — "SIMPLE" is an acronym for "Savings Investment Match Plan for Employees," and these plans are for businesses with up to 100 employees. Contributions are made through salary deferrals and employer contributions. 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 businesses 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 is highly customizable and allows for significant contributions, there may be annual fees.
- Business 401(k) Plan — 401(k)s can be established 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 businesses and workers. They can 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 businesses made up only of an owner or of spouses. You can contribute up to the annual 401(k) limit each year, and the employer may make a nonelective contribution up to 25% of compensation 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 benefits and drawbacks, and there's no telling what's "best" for you without knowing your specific situation. Different plans have different tax benefits, fees, required minimum distributions, maximum contributions, 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 Lake St. Louis, MO
The particular, financial-based advantages to your Lake St. Louis, MO small business retirement plan will largely be based on the specific plan you set up. That said, there are many general benefits of setting up a small business retirement plan for both businesses and workers. 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. Below are some of the main benefits for both businesses and employees of having a small business retirement plan:
Employee Benefits
- More confidence in their retirement planning
- Tax deductions
- Contributions are simple with salary deferral
- They do not pay taxes on money they put in or investments gains until distributed
- As interest accrues, small savings grow into considerable savings
- Ability to conduct 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 upon initial set-up
Why Should I Consult With a Financial Advisor in Lake St. Louis, MO to Help With My Small Business Retirement Plan?
Creating small business retirement plans is complicated. While the federal government does not currently obligate any employer to offer retirement savings options to employees, some states require businesses of a certain size to have a retirement plan. Lake St. Louis, MO retirement consultants that have spent years helping business owners establish retirement plans are usually needed to not only make sure the plan is right for you, but that you abide by ever-changing tax and business laws.
As your Lake St. Louis, MO retirement plan consultants for your small business, our team will:
- Help you decide which plan works best for you and your employees, and the right custodian to hold plan 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 creating a record keeping system
- Help you operate your plan by keeping up-to-date 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 component to their ongoing financial journey
Correct Capital's Lake St. Louis, MO financial planners are fiduciary advisors, meaning we are obligated, by law and by regulatory oversight to do what's best for you and your employees. We work for you, and not our own firm. Request a consultation with a member of our advisor team today.
Other services we offer in Lake St. Louis, 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 Lake St. Louis, MO | Correct Capital
Operating a small business comes with a plethora of moving parts and tasks to ensure things run smoothly — navigating the complexities of 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* across the United States. To set up a retirement plan for your small business, or learn what we can do for business owners, call Correct Capital today at 314-930-401K or contact us online.
*as of January 2022
