Small Business Retirement Plans in Shrewsbury, MO. Setting up a retirement plan for you and your Shrewsbury, MO employees offers a variety of benefits, including tax reductions and a great way to attract and retain talent. However, many business owners understandably have questions about small business retirement plans. What type of plan is best for your business? 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 retiring and my business will no longer be running? Correct Capital's team of Shrewsbury, MO financial planners has over 70 years of combined experience helping business owners and their employees reap the rewards of having a sound retirement plans and understanding the specifics of federal regulations. Whether you already have a plan and want insight as to how it's performing or are looking to create an entirely new one, 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 Shrewsbury, MO?
The federal government and various financial institutions offer different plans and accounts for small business owners and their employees to better prepare for retirement. 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 the money put into the account grows tax-deferred. Contributions are limited to the lessor of 25% of an employee's yearly earnings or $66,000 (as of 2023). Employers are required to contribute an equal percentage of compensation to their own, however the contributions are tax-deductible.
- SIMPLE IRA — "SIMPLE" stands for "Savings Investment Match Plan for Employees," and these IRAs 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 plan is low-cost as the set-up is fairly inexpensive.
- Personal Defined Benefit Plan — This plan is reserved for owner-only businesses, or employers with up to 5 employees. With this plan, an employee targets how much they would like to have in retirement, and contribution limits are modified annually 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 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 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 known as an i401(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 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 can choose to open a Roth 401(k) account, or roll over pre-tax assets.
Each plan has its own benefits and drawbacks, and there's no telling what's "best" for you without knowing your specific situation. Different retirement have varying tax advantages, expenses, required minimum distributions, limits on how much you can put in each year, and more. A knowledgeable financial advisor like ours here at Correct Capital will be able to help you determine which plan works best for you and your team.
Why You Should Set Up a Small Business Retirement Plan in Shrewsbury, MO
The specific, financial-based benefits for your Shrewsbury, 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 workers responded to a survey saying it 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
- Improved financial security in retirement
- Reduced taxable income
- Contributions can be easily made through payroll deductions
- They do not pay taxes on contributions or how the money grew until they withdraw them
- Over the years small contributions grow into significant 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
- Flexible plan options to fit your plan to your needs
- Tax credits that can help reduce startup costs
Why Should I Consult With a Financial Advisor in Shrewsbury, MO to Help 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 retirement savings options to workers, certain states require employers with a certain number of employees to have a retirement plan. Shrewsbury, MO retirement consultants that are experienced in helping business owners establish 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 Shrewsbury, MO retirement plan consultants for your small business, our financial planners 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 how specific of the plan apply to their retirement, and developing a record keeping system
- Help you operate your plan by keeping up-to-date 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 ongoing financial journey
Correct Capital's Shrewsbury, MO advisors hold ourselves to the fiduciary standard, meaning we are obligated, by law and by regulatory oversight to do what's best for you and your employees. As an independent firm, we have the freedom and flexibility to tailor our offerings to best suit the goals of our clients. Request a meeting with a member of our advisor team today.
Other services we offer in Shrewsbury, 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 Shrewsbury, MO | Correct Capital
Owning a small business involves a mountain of daily, monthly, and annual 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* nationwide. 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 through our website.
*as of January 2022
