Small Business Retirement Plans in Lemay, MO. Offering a retirement plan to your Lemay, MO employees is a great way to retain talent, boost performance, and get those much-desired tax breaks. However, many business owners understandably have questions about small business retirement plans. What type of plan is best for your business? What federal regulations do I 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 Lemay, MO financial planners is committed to helping business owners and their employees reap the benefits 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 online.
What Types of Retirement Plans Can Small Businesses Open in Lemay, MO?
Uncle Sam and various 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 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. 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 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. Employees can fund their own accounts through salary deferrals, and employers can also contribute. This is relatively inexpensive for employers as it's mainly funded by employees, and employer contributions can be deducted as a business expense.
- Personal Defined Benefit Plan — This plan is only available to owner-only businesses, or employers with up to 5 employees. With this plan, an employee decides on a desired level of retirement income, and contribution limits are adjusted each year based on that, with a maximum limit set each year. 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 considerable tax planning benefits for both businesses and employees. They can include:
- Traditional 401(k)s
- Profit-sharing plans
- Safe Harbor 401(k)s
- Automatic enrollment 401(k)s
- Individual 401(k) — Also called a Solo 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 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 may also decide to open a Roth 401(k) account, or roll over pre-tax assets.
There are pros and cons to each plan, and which may be better suited to you will depend on your business and your and your employees' needs. Different plans have different tax advantages, fees, required minimum distributions, contribution limits, 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.
Why You Should Set Up a Small Business Retirement Plan in Lemay, MO
The particular, financial-based advantages to your Lemay, MO small business retirement plan is dependent upon which plan you set up. However, a small business retirement plan, whichever one you choose, benefit employers and employees in the same way. 60% of 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. Below are some of the main benefits for both businesses and employees of setting up a small business retirement plan:
Employee Benefits
- Improved financial security in retirement
- Reduced taxable income
- Contributions are simple with salary deferral
- Contributions and investment gains are not taxed until distributed
- As interest accrues, small contributions grow into considerable savings
- Ability to perform a 401(k) rollover if they change employers
Business Benefits
- Attract, recruit, and retain talent
- Incentivize based on performance-based employer contributions
- Employer contributions are tax-deductible
- Highly customized plans are available
- Tax credits upon initial set-up
Do I Need a Financial Advisor in Lemay, MO to Help With My Small Business Retirement Plan?
Creating small business retirement plans is not the same thing as setting up a personal savings plan at your local Lemay, MO bank. While the federal government does not currently require any company to offer retirement savings options to workers, some states require employers with a certain number of employees to have a retirement plan. Lemay, MO retirement consultants that have spent years helping business owners establish retirement plans are usually needed to not only ensure you get the benefits you're looking for, but that you abide by ever-changing tax and business laws.
As your Lemay, 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 house the assets
- Assist you in establishing your plan, including creating a document that complies with IRS code, arranging a trust for plan assets, helping employees understand how specific of the plan apply to their savings, and developing 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 it can serve as a component to their ongoing financial success
Correct Capital's Lemay, MO 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. Request a consultation with a member of our advisor team today.
Other services we offer in Lemay, 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 Lemay, MO | Correct Capital
Owning a small business comes with countless 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* 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
