Small Business Retirement Plans in Tower Grove, MO. Establishing a retirement plan for you and your Tower Grove, MO employees is a great way to retain talent, incentivize higher performance, and get those much-needed tax breaks. While the benefits may be obvious, the difficulties of opening and maintaining small business retirement plans are not. What type of plan is best for your business? What federal regulations do I have to follow? What happens when I want to change plans, or if I'm retiring and my business will no longer be running? Correct Capital's team of Tower Grove, MO financial planners is dedicated to helping business owners and their employees get the most out of their retirement plans and understanding the specifics of their individual plans and benefits. For anything from initial setup and employee education to making annual adjustments, speak to a financial advisor at Correct Capital today at 314-930-401K or contact us through our website.
What Types of Retirement Plans Are Available to Small Businesses in Tower Grove, MO?
The federal government and different 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 — A "Simplified Employee Pension" is a type of individual retirement account that is available to business with no non-owner employees, or those 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 compensation or $66,000 (as of 2023), whichever is less. 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 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 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 only available to owner-only businesses, or employers 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 that, with a maximum limit set each year. While this plan allows for high contributions and a plan tailored to each individual, there may be annual fees.
- Business 401(k) Plan — 401(k)s are a workplace savings plan that offers employees tax breaks for contributions and investment opportunities. Employees pick a percentage of their compensation to be contributed, and investments are often held in mutual funds. Most 401(k) plans offer considerable tax planning advantages for both employers and employees. 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 functions similarly to a business 401(k), but for people who are self-employed, or whose only employee is a spouse. 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 the nature of your business and your employees' needs. Different accounts have varying tax benefits, expenses, required minimum distributions, maximum contributions, and more. An experienced financial advisor like ours here at Correct Capital will review your options and aid you in choosing the best retirement plan for your small business.
Why You Should Set Up a Small Business Retirement Plan in Tower Grove, MO
The particular, financial-based advantages to your Tower Grove, MO 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. Over half of workers responded to a survey stating it is a "very important" factor in job satisfaction, while employers also get tax breaks and can better attract and motivate employees. Below are some of the main benefits for both businesses and employees of setting up a small business retirement plan:
Employee Benefits
- More confidence in their retirement planning
- Reduced taxable income
- Contributions can be easily made through salary deferral
- Contributions and investment gains are not taxed until distributed
- Over the years small savings grow into considerable savings
- Ability to conduct a 401(k) rollover if it's beneficial down the road
Business Benefits
- Attract, recruit, and retain your best employees
- 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
Do I Need a Financial Advisor in Tower Grove, MO to Help With My Small Business Retirement Plan?
Opening small business retirement plans is complicated. While the federal government does not currently obligate any company to offer retirement savings options to employees, certain states require businesses with a certain number of employees to have a retirement plan. Tower Grove, MO retirement consultants that have spent years helping business owners establish 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 evolving tax and business laws.
As your Tower Grove, MO 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 establishing your plan, including creating a document that complies with IRS code, establishing a trust for plan assets, helping employees understand how specific of the plan apply to their savings, 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 they can use it as a part of their ongoing financial health
Correct Capital's Tower Grove, MO financial planners are fiduciary advisors, meaning we are obligated, by law and by ethics to only offer advice based on what we believe is in your best interest. We work for you, and not our own firm. Request a consultation with a member of our advisor team today.
Other services we offer in Tower Grove, 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 Tower Grove, MO | Correct Capital
Operating a small business comes with countless daily, monthly, and annual tasks to ensure things run smoothly — navigating the complexities of 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* across the United States. 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
