Small Business Retirement Plans in Swansea, IL. Offering a retirement plan to your Swansea, IL employees is a great way to retain talent, incentivize higher performance, and get those much-desired tax reductions. While the benefits may be clear, the difficulties of establishing and maintaining small business retirement plans are not. What type of plan is best for your business? What are the different laws I'll have to follow? What do I do when I want to change plans, or if I'm retiring and my business will no longer be running? Correct Capital's team of Swansea, IL financial planners has over 70 years of combined experience helping business owners and their employees reap the rewards of their retirement plans and understanding the ins-and-outs of their individual plans and benefits. Whether you already have a plan and want insight as to how it's performing or need to set up a plan, call Correct Capital today at 314-930-401K or contact us through our website.
What Types of Retirement Plans Are Available to Small Businesses in Swansea, IL?
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. 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 owner-only businesses, freelancers, and businesses with very few employees. It functions similarly to a traditional IRA, where the money put into the account grows tax-deferred. You cannot contribute more than 25% of an employee's yearly earnings or $66,000 (as of 2023), whichever is less. 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 for businesses with up to 100 employees. Contributions are made through salary deferrals and employer contributions. This plan is low-cost as the set-up is fairly inexpensive.
- Personal Defined Benefit Plan — This plan is only available to business with no non-owner employees, or those with no more than 5 employees. With this plan, an employee decides on a desired level of retirement income, and contribution limits are adjusted 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 annual fees.
- Business 401(k) Plan — 401(k)s can be set up 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 benefits for both employers and employees. They can include:
- Individual 401(k) — Also called an Owner-Only 401(k), this plan has many of the same rules and benefits as 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 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.
There are pros and cons to each plan, and which may be "best" for you will depend on your business and your and your employees' needs. Different plans have varying tax advantages, fees, required minimum distributions, limits on how much you can put in each year, and more. A knowledgeable financial advisor like our team at Correct Capital will review your options and guide you in choosing the best retirement plan for your small business.
Why You Should Set Up a Small Business Retirement Plan in Swansea, IL
The specific, financial-based benefits for your Swansea, IL small business retirement plan is dependent upon which 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 say that a retirement plan 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. Companies and employees will both enjoy:
- More financial security in retirement
- Tax deductions
- Contributions are simple with payroll deductions
- Contributions and investment gains are not taxed until they withdraw them
- As interest accrues, small savings grow into significant savings
- Ability to conduct a 401(k) rollover if they change employers
- Attract, recruit, and retain talent
- Promote great work ethic
- Employer contributions are tax-deductible
- Highly customized plans are available
- Tax credits upon initial set-up
Do I Need a Financial Advisor in Swansea, IL to Assist With My Small Business Retirement Plan?
Creating small business retirement plans is far different from setting up a personal savings plan at your local Swansea, IL bank. While the federal government does not currently require any employer to offer retirement savings options to workers, some states require employers with a certain number of employees to have a retirement plan. Swansea, IL retirement consultants that have spent years helping business owners set up retirement plans are usually needed to not only ensure you and your employees get the most out of your plan, but that you abide by ever-changing tax and business laws.
As your Swansea, IL retirement plan consultants for your small business, our financial planners will:
- Help you decide which plan works best for you and your employees, and the right custodian to hold plan assets
- Assist you in setting up 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 adapting as we need to to 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 part of their ongoing financial journey
Correct Capital's Swansea, IL financial planners are fiduciary advisors, meaning we are obligated, by law and by ethics to do what's best for you and your employees. The only product we offer is trust. Request a meeting with a member of our advisor team today.
Other services we offer in Swansea, 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
- Retirement Calculator
Small Business Retirement Plans in Swansea, IL | Correct Capital
Owning 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 in both small and large companies, 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 we can do for business owners, call Correct Capital today at 314-930-401K or contact us through our website.
*as of January 2022