Small Business Retirement Plans in Millstadt, IL. Starting up a retirement plan for you and your Millstadt, IL employees is a great way to retain talent, incentivize higher performance, and get those much-needed tax breaks. However, for most business owners, it can be difficult to know how to proceed once they decide to establish one. What type of plan is best for your business? What are the different laws that apply to different plans? What happens when I want to change plans, or if I'm closing my business? Correct Capital's team of Millstadt, IL 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 navigate the complexity of financial law. Whether you already have a plan and want insight as to how it's performing or are looking to create an entirely new one, call Correct Capital today at 877-930-4015 or contact us through our website.
What Types of Retirement Plans Are Available to Small Businesses in Millstadt, IL?
The federal government and different financial institutions 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 self-employed business owners with no employees, freelancers, and businesses with very few employees. It functions similarly to a traditional IRA, where contributions are tax-deductible, and distributions are taxed as income. Contributions are limited to the lessor of 25% of an employee's yearly earnings or $66,000 (as of 2023). Employers can deduct contributions they make on behalf of their employees.
- SIMPLE IRA — "SIMPLE" stands for "Savings Investment Match Plan for Employees," and these IRAs are for businesses with up to 100 employees. 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 it's mainly funded by employees, and employer contributions can be deducted as a business expense.
- Personal Defined Benefit Plan — This plan is strictly for business with no non-owner employees, or those with up to 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 their desired income, age, salary, and tenure with the company. While this plan is highly customizable and allows for significant contributions, you will be subject to startup costs.
- Business 401(k) Plan — 401(k)s can be established by private companies of any size, and are highly customizable. There are annual contribution limits. Most 401(k) plans come with considerable tax planning benefits 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 referred to as a Solo 401(k), this plan is aimed at offering similar benefits to 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 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 can choose 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 "best" for you will be based on the nature of your business and your employees' needs. Different accounts have varying tax breaks, costs, 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.
Benefits of Setting Up a Small Business Retirement Plan in Millstadt, IL
The particular, financial-based benefits for your Millstadt, IL small business retirement plan will largely be based on the specific plan you set up. That said, 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. Companies and employees will both enjoy:
Employee Benefits
- More confidence in their retirement planning
- Reduced taxable income
- Contributions are simple with payroll deductions
- Contributions and investment gains are not taxed until they take them out
- Over the years small savings grow into considerable savings
- Ability to perform a 401(k) rollover if they change employers
Business Benefits
- 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 Millstadt, IL to Assist With My Small Business Retirement Plan?
Opening small business retirement plans is far different from setting up a personal account at your local Millstadt, IL bank. While the federal government does not currently require any employer to offer a retirement plan to workers, some states require businesses of a certain size to have a retirement plan. Millstadt, IL retirement consultants that have spent years helping business owners establish retirement plans are usually needed to not only ensure the plan is right for you, but that you abide by ever-changing tax and business laws.
As your Millstadt, IL retirement plan consultants for your small business, our financial planners will:
- Help you elect the "right" plan for you, and the right custodian to hold plan 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 the plan's terms, and implementing 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 it can serve as a important aspect of their ongoing financial health
Correct Capital's Millstadt, IL financial planners are fiduciary advisors, meaning we are legally and ethically bound 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 Millstadt, IL include:
- Succession Planning
- Fiduciary Financial Advisor
- Company 401(k) Plans
- ESOP Advisor
- Self-Employed Retirement Plans
- 401(k) For Small Business
- Tax Planning
Small Business Retirement Plans in Millstadt, IL | Correct Capital
Operating a small business involves a mountain 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* across the United States. To set up a retirement plan for your small business, or learn what other services we offer to business owners, call Correct Capital today at 877-930-4015 or contact us online.
*as of January 2022
