Small Business Retirement Plans in Manchester, MO. Offering a retirement plan to your Manchester, MO employees is a great way to retain talent, incentivize higher performance, and get those much-desired tax reductions. While the benefits may be obvious, the difficulties of opening and maintaining small business retirement plans are not. 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 closing my business? Correct Capital's team of Manchester, MO financial planners is dedicated to helping business owners and their employees reap the rewards of having a sound retirement plans and navigate the complexity of financial law. 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 Manchester, MO?
The federal government 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 type of individual retirement account 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. The maximum contribution in a given year is 25% of an employee's compensation or $66,000 (as of 2023), whichever is less. 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" stands for "Savings Investment Match Plan for Employees," and these individual retirement accounts are frequently thought of as "start-up" retirement savings plans for smaller businesses that do not yet offer a plan. Employers can contribute 2% of an employee's compensation, or dollar-to-dollar match an employee's contribution up to 3%.. This plan is low-cost 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 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 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 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. There are annual contribution limits. Most 401(k) plans come with significant tax planning benefits for both employers and workers. They can include:
- Individual 401(k) — Also referred to as a Solo 401(k), this plan has many of the same rules and benefits as 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 compensation 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 can choose to open a Roth 401(k) account, or roll over pre-tax assets.
There are pros and cons to each plan, and it's impossible to say which is "best" for you without knowing your specific situation. Different plans have different tax advantages, expenses, required minimum distributions, maximum contributions, and more. A reputed financial advisor like ours here 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 Manchester, MO
The specific, financial-based advantages to your Manchester, MO small business retirement plan is dependent upon which plan you choose. That said, there are many general benefits of setting up a small business retirement plan for both businesses and workers. Over half of employees responded to a survey stating it is a "very important" factor in job satisfaction, while employers reap the benefits both during tax season and in office productivity. Below are some of the main benefits for both businesses and employees of establishing a small business retirement plan:
- Improved financial security in retirement
- Reduced taxable income
- Contributions can be easily made through salary deferral
- They do not pay taxes on contributions or how the money grew until they withdraw them
- Over the years small savings grow into significant sums of money
- Ability to perform a 401(k) rollover if they change employers
- Attract, recruit, and retain high performers
- Incentivize based on performance-based employer contributions
- Employer contributions are tax-deductible
- Highly customized plans are available
- Tax credits that can help reduce startup costs
Do I Need a Financial Advisor in Manchester, MO to Assist With My Small Business Retirement Plan?
Creating small business retirement plans is complicated. While the federal government does not currently obligate any company to offer a retirement plan to employees, some states require employers with a minimum number of employees to offer access to a retirement plan. Manchester, MO retirement consultants that are experienced in helping business owners set up retirement plans are usually needed to not only make sure the plan is right for you, but that you follow ever-changing tax and business laws.
As your Manchester, MO retirement plan consultants for your small business, our advisers will:
- Help you elect which plan works best for you and your employees, and which financial institution should hold the assets
- Assist you in establishing your plan, including adopting a written plan, establishing a trust for plan assets, helping employees understand the plan's terms, 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 they can use it as a component to their ongoing financial journey
Correct Capital's Manchester, MO financial planners are fiduciary advisors, meaning we are legally and ethically bound to do what's best for you and your employees. We work for you, and not our own firm. Request a meeting with a member of our advisor team today.
Other services we offer in Manchester, MO include:
- 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
- Retirement Calculator
- Retirement Planning
Small Business Retirement Plans in Manchester, MO | Correct Capital
Owning a small business involves 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 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 314-930-401K or contact us online.
*as of January 2022