- March 26th, 2013
- John Dillard
- Virtual CFO, Business/Tax Consulting, Financial Planning, Business Loans & Money Management
There are too many options to be understood quickly. These are just a few that are among the most widely used for business owners.
A Savings Incentive Match Plan for Employees, a SIMPLE IRA plan is well suited for smaller employers. A company can select his plan if it has as little as one employee up to one hundred. A SIMPLE IRA is a relatively new entrant into tax law, and were established so small businesses could offer substantive benefits to their staff without the burdens of a SPD/Originating Plan Document to set up a plan, and the “top heavy” testing which a 401K requires. All monies taken out of an employee’s paycheck and forwarded to a retirement account of any type are immediately vested and owned by the employee. However, they are subject to the tax law and guidelines of any established plans and their contracted documents.
A Great Option for a One Employee Owner of a Business (an S Corporation or an LLC that has been converted to an S Corporation for tax purposes) is an Owner/Solo 401K which allows the owner to deduct $17,500 from their payroll and then the company can add up to a maximum of $49,000 or 100% of your compensation, whichever is less. If you are over 50 years of age the IRS allows an additional $5,500 which would also be a payroll deduction.
SIMPLE IRA’s have to be set up by October 1st of this year in order for them to be effective for 2013. Employees can set aside out of their payroll $12,000 for 2013. This limit is indexed and is updated periodically for inflation. For those over fifty years of age there is a “catch-up” provision which allows for an additional $5,500 to be withheld each year. The company then as a required matching which ranges from two to three percent so employees also receive the result of this benefit.
If you would like to explore these options feel free to give me a call so we can set up a joint meeting with a Gwinnett Financial Planner to Plan for your retirement needs.
Selecting the Proper Type of Retirement Plan for Your Business
Whether you are just getting started or have been in business for years, selecting amongst the varied retirement plans requires the skill of a surgeon and the grace of an artist. To learn more http://www.hiscpa.com/retirement-planning.html