Small Business Retirement Plans in Rock Hill, MO. Offering a retirement plan to your Rock Hill, MO employees is a great way to retain talent, boost performance, and get those much-desired tax breaks. However, many business owners understandably have questions about small business retirement plans. What benefits do different kinds of plans provide? What are the different laws that apply to different plans? What happens when a new plan seems like a better option, or if I'm retiring and my business will no longer be running? Correct Capital's team of Rock Hill, MO financial planners is dedicated to helping business owners and their employees reap the benefits of having a sound retirement plans and understanding the ins-and-outs of their individual plans and benefits. For anything from initial setup and employee guidance to fine-tuning an existing plan, speak to a financial advisor at Correct Capital today at 314-930-401K or contact us through our website.
What Types of Retirement Plans Can Small Businesses Open in Rock Hill, MO?
Types of retirement plans vary; some only apply to businesses of a certain size, while some differ other areas such as employer contributions. Depending on the specifics of your business, you may open any of the following:
- SEP-IRA — A "Simplified Employee Pension" is a type of individual retirement account that is available to self-employed business owners with no employees, people who do freelance work, and businesses with very few employees. It follows the same rules as 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 IRAs are frequently thought of as "start-up" retirement savings plans for smaller businesses that do not yet offer a plan. Contributions are made through salary deferrals and employer contributions. 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 owner-only businesses, or those with up to 5 employees. With this plan, an employee decides on how much they would like to have in retirement, and contribution limits are adjusted 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 have to pay costs and fees.
- Business 401(k) Plan — 401(k)s are a workplace savings plan that offers tax incentives 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 considerable tax planning advantages for both companies and workers. They can include:
- Individual 401(k) — Also called a One-Participant 401(k), this plan functions similarly to a business 401(k), but businesses made up only of an owner or of spouses. 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 taking into account 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 it's impossible to say which is "best" for you without knowing your specific situation. Different plans have different tax breaks, fees, 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 Rock Hill, MO
The particular, financial-based advantages to your Rock Hill, MO small business retirement plan is dependent upon which plan you set up. 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 saying 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 having a small business retirement plan:
- More confidence in their retirement planning
- Tax deductions
- Contributions can be easily made through salary deferral
- They do not pay taxes on money they put in or how the money grew until they withdraw them
- Over the years small savings grow into considerable sums of money
- Ability to conduct a 401(k) rollover if they change employers
- Attract, recruit, and retain high performers
- Incentivize based on performance-based employer contributions
- Deduct your taxable income from your taxable profits
- Flexible plan options to fit your plan to your needs
- Tax credits that can help reduce startup costs
Do I Need a Financial Advisor in Rock Hill, MO to Assist With My Small Business Retirement Plan?
Opening small business retirement plans is far different from setting up a personal savings plan at your local Rock Hill, MO bank. While the federal government does not currently require any business to offer a retirement plan to workers, certain states require employers with a minimum number of employees to offer access to a retirement plan. Rock Hill, MO retirement consultants that are experienced in helping business owners open retirement plans are usually needed to not only ensure you and your employees get the most out of your plan, but that you follow evolving tax and business laws.
As your Rock Hill, MO retirement plan consultants for your small business, our financial planners will:
- Help you elect the "right" plan for you, and which financial institution should hold the assets
- Assist you in setting up your plan, including adopting a written plan, arranging a trust for plan assets, helping employees understand how specific of the plan apply to their retirement, and developing 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 journey
Correct Capital's Rock Hill, MO advisors hold ourselves to the fiduciary standard, meaning we are obligated, by law and by ethics to only work in your best interest. We work for you, and not our own firm. Schedule a meeting with a member of our advisor team today.
Other services we offer in Rock Hill, 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 Rock Hill, MO | Correct Capital
Operating a small business involves countless moving parts and tasks to ensure things run smoothly — setting up and maintaining 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* throughout the country. 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 314-930-401K or contact us through our website.
*as of January 2022