Small Business Retirement Plans in O'Fallon, MO. Setting up a retirement plan for you and your O'Fallon, MO employees is a great way to retain talent, boost performance, and get those much-desired tax reductions. However, for most business owners, it can be difficult to know how to proceed once they decide to establish one. What benefits do different kinds of plans provide? What are the different laws I'll have to follow? What do I do when a new plan seems like a better option, or if I'm closing my business? Correct Capital's team of O'Fallon, MO financial planners has over 70 years of combined experience helping business owners and their employees get the most out of their retirement plans and understanding the complexity of federal regulations. For anything from initial setup and employee education to making annual adjustments, 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 O'Fallon, MO?
Types of retirement plans vary; some only apply to businesses of a certain size, while some differ other areas such as when plan participants enjoy tax benefits. Depending on the specifics of your business, 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 25% of an employee's yearly earnings or $66,000 (as of 2023), whichever is less. Employers can deduct contributions they make on behalf of their employees.
- SIMPLE IRA — "SIMPLE" stands for "Savings Investment Match Plan for Employees," and these individual retirement accounts are for businesses with up to 100 employees. Employers can contribute 2% of an employee's compensation, 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 reserved for business with no non-owner employees, or businesses with up to 5 employees. With this plan, you target a desired level of retirement income, and contribution limits are modified annually based on their desired income, age, salary, and tenure with the company. While this plan allows for high contributions and a plan tailored to each individual, you will be subject to annual fees.
- Business 401(k) Plan — 401(k)s are available to 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 come with considerable tax planning advantages for both businesses 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 called a One-Participant 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. You can contribute up to the annual 401(k) limit 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 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 there's no telling what's "best" for you without knowing your specific situation. Different accounts have varying tax advantages, fees, required minimum distributions, maximum contributions, and more. A knowledgeable financial advisor like those 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 O'Fallon, MO
The particular, financial-based advantages to your O'Fallon, MO small business retirement plan will largely be based on the specific plan you set up. However, there are many general benefits of setting up a small business retirement plan for both businesses and workers. Three out of five employees responded to a survey stating it is a "very important" factor in how good they feel at their present employment, 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:
Employee Benefits
- Better financial security in retirement
- Reduced taxable income
- Contributions can be easily made through salary deferral
- Contributions and investment gains are not taxed until distributed
- Over the years small contributions grow into considerable sums of money
- Ability to conduct a 401(k) rollover if they change employers
Business Benefits
- Attract, recruit, and retain talent
- Incentivize based on performance-based employer contributions
- Deduct your taxable income from your taxable income
- 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 O'Fallon, MO to Assist With My Small Business Retirement Plan?
Setting up small business retirement plans is far different from setting up a personal savings plan at your local O'Fallon, MO bank. While the federal government does not currently obligate any company to offer retirement savings options to employees, certain states require businesses of a certain size to offer access to a retirement plan. O'Fallon, MO retirement consultants that are experienced in helping business owners open retirement plans are usually needed to not only make sure you and your employees get the most out of your plan, but that you follow ever-changing tax and business laws.
As your O'Fallon, MO retirement plan consultants for your small business, our team will:
- Help you choose the best plan for you, and which financial institution should hold the assets
- Assist you in establishing your plan, including creating a document that complies with IRS code, establishing a trust for plan assets, helping employees understand the plan's terms, and creating 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 they can use it as a important aspect of their continued financial health
Correct Capital's O'Fallon, MO advisors hold ourselves to the fiduciary standard, meaning we are legally and ethically obligated to only work in your best interest. The only product we offer is trust. Schedule a consultation with a member of our advisor team today.
Other services we offer in O'Fallon, 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 O'Fallon, MO | Correct Capital
Operating a small business involves a plethora 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 for a variety of types of businesses, 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 through our website.
*as of January 2022
