Small Business Retirement Plan Options

Small Business Retirement Plan Options-77
A traditional 401(k) plan—the kind in which your employees contribute tax-deferred money to a retirement account—might be the first thing that pops into your head.But if your small business has 100 employees or fewer, there are options outside of a traditional 401(k) that may better suit the needs of your business and employees.

Tags: Term Paper Sa FilipinoBusiness Plan CanadaEssays About Passion Of The ChristTechnical Writing EssayThe Of A Salesman EssaysHow To Write A Composition Essay

Annual fee is waived for account balances of $50,000 or more. Please consult your tax advisor about your particular situation. Generally, you may borrow up to one-half of your vested account balance, but no more than $50,000.

Businesses with no employees other than the owners and their spouses. Distributions are limited to the terms of the plan. Minimum distributions are required for owners 70½ or older.

You may be required to file IRS Form 5500 annually.

As a result of the 2006 Pension Protection Act, for plan years after 2006, one-participant plans with total plan assets of $250,000 or less are exempt from filing Form 5500-EZ.

If you have employees or anticipate hiring employees in the near future, this plan isn't appropriate for you. Distributions that are not qualified Roth distributions are subject to income tax in the year withdrawn and a 10% early withdrawal penalty if withdrawn prior to 59½.

401(k) discrimination (ADP) and top-heavy tests aren't required.Only employers are allowed to make contributions, which can reduce taxes as a business expense.Those contributions go to a traditional IRA held in the employee’s name, and contributions can be as much as 25% of an employee’s income (or up to ,000, whichever is less).Nonqualified distributions will be taxed pro-rata; Therefore the basis (contributions) will be tax-free and any earnings will be subject to ordinary income tax plus a 10% premature distribution penalty (exceptions may apply). Please consult your tax advisor about your particular situation.When you think of a company-sponsored small business retirement plan, what comes to mind?Your small business—or anyone with freelance income—can open a SEP IRA.They’re easy and have high contribution limits, and it can be used as a competitive recruiting advantage.They’re also great for diversifying tax savings strategies, which is one of the many ways a 401(k) can be designed with unique business needs in mind.If you’re looking to maximize your tax benefits and take advantage of higher contribution limits (,000, or ,000 for those 50 and older) than a typical IRA (,000, or ,000 for those 50 and older), a 401(k) will allow you to take advantage of many savings features.A traditional 401(k) plan—sometimes referred to as a defined contribution plan—is a common retirement plan that many small businesses choose to start.The biggest obstacle is typically cost—but the flexibility of features for a traditional 401(k) is the main reason business owners choose this type of employer-sponsored retirement plan.

SHOW COMMENTS

Comments Small Business Retirement Plan Options

The Latest from eldvigperm.ru ©