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Small Business Retirement Planning

Chris Discusses Small Business Retirement Planning on
News Channel 5 Nashville's SCORE CONNECT

Retirement Plans for Business Owners

Retirement Plans for Business Owners

As a business owner, one of your top priorities is to take care of yourself, your team and your families. Financial health and wellness is a meaningful team benefit. It goes beyond just having a plan or adhering to a state mandate. Your retirement plan should be designed to meet the specific needs of your business. Because each business is unique, the IRS allows for a variety of plan types.  

But having a plan is not enough. It's like a garden that needs to be monitored, watered, and nourished regularly. Let us help you establish your retirement plan and help you make it flourish. 

Reviewing Your Current Plan

Reviewing Your Current Plan

A plan is like a garden that needs to be monitored, watered, and nourished regularly.

Let us help keep yours blooming. If your plan needs some tending, we are happy to help you take a look and see what we can do to help you improve it for you and your team

Below is a downloadable plan diagnostic tool that can guide you to see if your plan might benefit from a review.

Safe Harbor 401(k)

Safe Harbor 401(k)

A safe harbor 401(k) exempts an employer from annual non-discrimination testing that is required with a non-safe harbor 401(k) plan if the employer provides, among other things, contributions to employees' accounts that are fully vested when made. The standard safe harbor plan requires a 100% match on the first 3% an employee contributes and then an additional 50% match on the next 2%. For example, an employee who contributes 5% or more will earn a match capped at 4%.

Non-Safe harbor 401(k)

Non-Safe harbor 401(k)

This plan does not require a company to make mandatory employer contributions. However, Non-Safe Harbor plans will require annual compliance testing to ensure they are not top-heavy (meaning that compensating some employees more than others). Based on compensation levels, business owners may not be able to to contribute to the plan and highly compensated employees would be significantly limited to what they can contribute.

Profit Sharing Plan

Profit Sharing Plan

These can be standalone plans or added on to a 401(k) plan. As an add-on to a 401(k) plan they require a optional profit-sharing contribution for all eligible employees even if they are not otherwise participating in the plan.

As a standalone plan they also require contributions for all plan eligible employees.

Profit sharing can be set with different vesting schedules based on  years of service. For example, 6-year cliff vesting schedule would allow let participants to vest in to their contributions at the following percentage per year of service: 0%, 20%, 40%, 60%, 80%, 100%.

SIMPLE IRA plans

SIMPLE IRA plans

A SIMPLE IRA plan (Savings Incentive Match PLan for Employees) allows employees and employers to contribute to traditional IRAs set up for employees. 

The contribution rules are inflexible and they have lower contribution limits compared to other plans. They are only permitted for use in business with 100 employees or less.

They are often a precursor plan to a 401(k) and are limited to businesses with under 100 employees. As technology is driving down costs on 401(k) plans, it may be worth considering starting with the 401(k) plan and avoiding the complexities of changing.

Plans for Solos and the Self-Employed

Plans for Solos and the Self-Employed

If you are self-employed and want to contribute more to a retirement plan that an IRA or ROTH IRA will permit you also have options.

Simplified Employee Pension (SEP) - Allowing employers but not employees to set aside money in SEP-IRA retirement accounts for themselves and their employees and allows for a contribution of up to 25 percent of each employee's pay.

SOLO 401(k) -  A traditional 401(k) plan covering a business owner with no employees, or that person and their spouse. These plans have the same rules and requirements as any other 401(k) plan.

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Let us be your partner in retirement planning. 

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