Small Business Retirement Plans in Westwood, MO. Setting up a retirement plan for you and your Westwood, 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 benefits do different kinds of plans provide? What are the different laws that apply to different plans? What happens when I want to change plans, or if I'm closing my business? Correct Capital's team of Westwood, MO financial planners has over 70 years of combined experience helping business owners and their employees reap the rewards of their retirement plans and navigate the complexity of federal regulations. For anything from initial setup and employee education to fine-tuning an existing plan, speak to a financial advisor at Correct Capital today at 314-930-401K or contact us online.
What Types of Retirement Plans Can Small Businesses Open in Westwood, MO?
The federal government and various financial custodians 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 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 compensation 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" is an acronym for "Savings Investment Match Plan for Employees," and these plans 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 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 owner-only businesses, or those with up to 5 employees. With this plan, you target a desired level of retirement income, and contribution limits are adjusted each year based on that, with a maximum limit set each year. While this plan is highly customizable and allows for significant contributions, there may be annual 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 offer significant tax planning advantages for both employers 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 Solo 401(k), this plan has many of the same rules and benefits as 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 you can contribute a set percentage of your compensation 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 benefits and drawbacks, and which may be better suited to you will depend on your business and your and your employees' needs. Different accounts have different tax benefits, fees, required minimum distributions, maximum contributions, and more. A knowledgeable financial advisor like our team 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 Westwood, MO
The specific, financial-based benefits for your Westwood, MO small business retirement plan is dependent upon which plan you set up. However, a small business retirement plan, whichever one you choose, has universal benefits. Over half of workers 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 setting up a small business retirement plan:
Employee Benefits
- Better financial security in retirement
- Tax deductions
- Contributions can be easily made through salary deferral
- They do not pay taxes on contributions or how the money grew until distributed
- Over the years small savings grow into significant sums of money
- Ability to conduct a 401(k) rollover if they change employers
Business Benefits
- Attract, recruit, and retain talent
- Promote great work ethic
- Deduct your taxable income from your taxable profits
- Highly customized plans are available
- Tax credits that can help reduce startup costs
Why Should I Consult With a Financial Advisor in Westwood, MO to Assist With My Small Business Retirement Plan?
Setting up small business retirement plans is complicated. While the federal government does not currently require any company to offer a retirement plan to employees, certain states require employers of a certain size to have a retirement plan. Westwood, MO retirement consultants that have spent years helping business owners set up retirement plans are usually needed to not only make sure you get the benefits you're looking for, but that you follow frequently chancing tax and business laws.
As your Westwood, MO retirement plan consultants for your small business, our financial planners will:
- Help you choose which plan works best for you and your employees, and which financial institution should house the assets
- Assist you in establishing 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 implementing a record keeping system
- Help you operate your plan by staying compliant with applicable 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 component to their continued financial health
Correct Capital's Westwood, MO advisors hold ourselves to the fiduciary standard, meaning we are obligated, by law and by ethics to do what's best for you and your employees. The only thing we sell is trust. Request a meeting with a member of our advisor team today.
Other services we offer in Westwood, 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 Westwood, MO | Correct Capital
Operating a small business comes with a plethora 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* 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 online.
*as of January 2022
