Small Business Retirement Plans in Madison County, IL. Offering a retirement plan to your Madison County, IL employees is a great way to retain talent, boost performance, and get those much-needed 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 closing my business? Correct Capital's team of Madison County, IL financial planners is committed to helping business owners and their employees reap the benefits of their retirement plans and understanding the specifics of financial law. Whether you already have a plan and want insight as to how it's performing or need to set up a plan, speak to a financial advisor at Correct Capital today at 877-930-4015 or contact us through our website.
What Types of Retirement Plans Can Small Businesses Open in Madison County, IL?
Uncle Sam and different 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 owner-only businesses, people who do freelance work, 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. Contributions are limited to 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" stands for "Savings Investment Match Plan for Employees," and these plans are commonly seen as "start-up" retirement savings plans for smaller businesses that do not yet offer a plan. Employers can contribute 2% of an employee's paycheck, or dollar-to-dollar match an employee's contribution up to 3%.. 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 reserved for owner-only businesses, or businesses with up to 5 employees. With this plan, you target how much they would like to have in retirement, and contribution limits are modified annually based on that, with a maximum limit set each year. While this plan is highly customizable and allows for significant contributions, there may be startup costs.
- Business 401(k) Plan — 401(k)s are a workplace savings plan that offers employees tax breaks for contributions and allows employees to invest savings so the money can benefit them later. Employees pick a percentage of their compensation to be contributed, and investments are often held in mutual funds. Most 401(k) plans come with significant tax planning benefits for both companies 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 referred to as an i401(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 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 which may be "best" for you will be based on your business and your and your employees' needs. Different plans have varying tax benefits, expenses, required minimum distributions, limits on how much you can put in each year, and more. A prudent financial advisor like our team at Correct Capital will be able to help you determine which plan works best for you and your team.
Benefits of Setting Up a Small Business Retirement Plan in Madison County, IL
The specific, financial-based advantages to your Madison County, IL small business retirement plan is dependent upon which plan you choose. That said, a small business retirement plan, whichever one you choose, has universal benefits. 60% of employees 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
- Tax deductions
- Contributions are simple with payroll deductions
- They do not pay taxes on money they put in or investments gains until they take them out
- As interest accrues, small contributions grow into considerable savings
- Ability to conduct 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 upon initial set-up
Why Should I Consult With a Financial Advisor in Madison County, IL to Assist With My Small Business Retirement Plan?
Setting up small business retirement plans is complicated. While the federal government does not currently require any business to offer retirement savings options to employees, certain states require businesses with a certain number of employees to offer access to a retirement plan. Madison County, IL retirement consultants that are experienced in helping business owners create retirement plans are usually needed to not only make sure you get the benefits you're looking for, but that you follow ever-changing tax and business laws.
As your Madison County, IL retirement plan consultants for your small business, our advisers will:
- Help you elect the best plan for you, and which financial institution should house the assets
- Assist you in establishing your plan, including adopting a written plan, 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 adapting as we need to to relevant 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 part of their continued financial health
Correct Capital's Madison County, IL advisors hold ourselves to the fiduciary standard, meaning we are legally and ethically obligated to do what's best for you and your employees. The only thing we sell is trust. Schedule a meeting with a member of our advisor team today.
Other services we offer in Madison County, 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 Madison County, IL | Correct Capital
Operating a small business comes with a plethora of moving parts and 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 in both small and large companies, and represents over $230 million in total plan assets* nationwide. To set up a retirement plan for your small business, or learn what we can do for business owners, call Correct Capital today at 877-930-4015 or contact us online.
*as of January 2022
