Retirement Plan Options

June 23rd, 2007 at 02:33pm Under 401k

Establishing a retirement plan for yourself and your employees can help you attract and retain workers and give you personal and business tax deductions. Yet you haven’t taken the final step to create a plan, because every time you look at that alphabet soup of choices – SEP IRA, Roth 401K, Roth IRA, SIMPLE IRA, 457 Plans, IRA contribution limits, SE 401k, 403b Plans, 401k Rollover – you become overwhelmed by the options and translating their impact into real life for your business.

Then there are the costs and responsibility involved. About a third of small business owners cite revenue uncertainty as the biggest obstacle to establishing a retirement plan, according to the Employee Benefit Research Institute. Costs ranked second, at 16 percent.

Yet of those small businesses that do create a plan, two-thirds do so to positively effect employee attitude and performance. Other reasons include creating a competitive edge in recruiting and retaining workers and tax advantages for employees, key executives, the owner and the business.

Most retirement plans fall into three general categories: Individual Retirement Arrangements, defined contribution plans and defined benefit plans. Defined benefit plans commit the employer to providing a specified benefit to retirees, often based on a percentage of pay and the number of years the individual worked for the business. Most small businesses can’t carry the burden of such arrangements and opt instead for one of the other two types.

An 401k Withdrawal typically exists outside the employment relationship; in other words, the employer does not fund or contribute to the accounts and does not dictate when an employee can withdrawal or how much. 401k’s do offer tax benefits for employees who contribute to them, and employers can encourage those contributions by offering payroll deduction.

So if you haven’t set up a retirement plan for your business – or if your business has grown or changed and you want to revisit your plan to ensure it still achieves what you intended – take the first step and contact your financial advisor. You don’t have to eat that alphabet soup alone.

401k Rollover,401k Withdrawal,Roth 401k,IRA Contribution Limits,

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