ISAKOV Planning Group Blog
Tuesday, September 03 2019
Dedicated employees of a small, growing business need the security of knowing they are helping to finance their retirement. This is a key reason why some employees join one company over another. Starting a retirement plan not only helps finance your future, but it is probably the only way your employees can fund their own. Additionally, retirement fund contributions are tax-deductible as a business expense. This can mean considerable tax bill savings at the end of the year.
Small business owners have several valuable options in setting up retirement programs. Much of the choices boil down to, (1) who will be eligible for the retirement program, (2) will eligible employees be able to contribute their own money to the plan? and (3) which is most important to you, the business owner—maximizing contributions or simplifying administration of the retirement plan?
Four types of retirement plans are at the center of small business discussions:
Each of these plan types offer the potential for tax-deferred savings growth and the possibility of deducting your company contributions as a business expense. In addition, your business will be entitled to a tax credit for start-up expenses associated with setting up your first retirement plan.
In order to decide which is best for your small business, you’ll need to lay out all of the costs of administration, contribution limits, and the tax benefits of each type. Don’t make the mistake of choosing a plan that fails to deliver the best combination of costs and benefits. The US Department of Labor has published a detailed paper that compares each type of plan and is available free of charge.
Here is a basic description for each option:
Speak with our financial planning professionals at Isakov Planning Group about why a small-business retirement program is important and how the options stack up for your specific business.
Contact us for a free consultation.