Small Business Retirement Plans in O'Fallon, IL. Offering a retirement plan to your O'Fallon, IL employees offers a variety of benefits, including tax reductions and a great way to attract and retain talent. However, for most business owners, it can be difficult to know where to start. What type of plan is best for your business? What federal regulations do I have to follow? What do I do when I want to change plans, or if I'm closing my business? Correct Capital's team of O'Fallon, 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 understanding the specifics of federal regulations. For anything from initial setup and employee education to fine-tuning an existing 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 Are Available to Small Businesses in O'Fallon, IL?
The federal government and various financial institutions offer different plans and accounts for small business owners and their employees to aid in there retirement planning. Depending on your specific needs, you may open any of the following:
- SEP-IRA — This kind of individual retirement account is available to owner-only businesses, people who do freelance work, and businesses with very few employees. It functions similarly to a traditional IRA, where contributions are tax-deductible, and distributions are taxed as income. You cannot contribute more than the lessor of 25% of an employee's compensation or $66,000 (as of 2023). Employers can deduct contributions they make on behalf of their employees.
- SIMPLE IRA — "SIMPLE" is an acronym for "Savings Investment Match Plan for Employees," and these plans are commonly 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 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 strictly for business with no non-owner employees, 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 their desired income, age, salary, and tenure with the company. While this plan is highly customizable and allows for significant contributions, there may be costs and fees.
- Business 401(k) Plan — 401(k)s are a workplace savings plan that offers tax incentives and investment opportunities. There are annual contribution limits. Most 401(k) plans offer considerable tax planning benefits for both companies and workers. 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 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. A maximum contribution level is set each year, and you can contribute a set percentage of your compensation or, if self-employed, an amount considering 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 advantages and drawbacks, and which may be better suited to you will depend on your business and your and your employees' needs. Different retirement have varying tax benefits, expenses, required minimum distributions, maximum contributions, and more. A knowledgeable financial advisor like those at Correct Capital will review your options and guide you in choosing the best retirement plan for your small business.
Benefits of Setting Up a Small Business Retirement Plan in O'Fallon, IL
The particular, financial-based benefits for your O'Fallon, IL 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. 60% of employees responded to a survey saying it is a "very important" factor in job satisfaction, while employers reap the benefits both during tax season and in office productivity. Companies and employees will both enjoy:
Employee Benefits
- Better confidence in their retirement planning
- Reduced taxable income
- Contributions are simple with payroll deductions
- They do not pay taxes on money they put in or investments gains until they take them out
- Over the years small savings grow into significant savings
- Ability to conduct a 401(k) rollover if they change employers
Business Benefits
- Attract, recruit, and retain high performers
- Promote great work ethic
- Deduct your taxable income from your taxable income
- Highly customized plans are available
- Tax credits that can help reduce startup costs
Why Should I Consult With a Financial Advisor in O'Fallon, IL to Assist With My Small Business Retirement Plan?
Setting up small business retirement plans is complicated. While the federal government does not currently obligate any business to offer a retirement plan to employees, certain states require employers of a certain size to offer access to a retirement plan. O'Fallon, IL retirement consultants that are experienced in helping business owners open 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 O'Fallon, IL retirement plan consultants for your small business, our advisers will:
- Help you elect the best plan for you, and which financial institution should hold the assets
- Assist you in setting up your plan, including adopting a written plan, establishing a trust for plan assets, helping employees understand how specific of the plan apply to their retirement, and implementing a record keeping system
- Help you operate your plan by staying compliant with relevant 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 continued financial health
Correct Capital's O'Fallon, IL financial planners are fiduciary advisors, meaning we are obligated, by law and by ethics to only work in your best interest. The only product we offer is trust. Request a consultation with a member of our advisor team today.
Other services we offer in O'Fallon, 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 O'Fallon, IL | Correct Capital
Operating a small business involves 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 for a variety of types of businesses, 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, speak to a financial advisor at Correct Capital today at 877-930-4015 or contact us through our website.
*as of January 2022
