Business Retirement Plans

Updated 8 months ago

When you have a business and are working on every aspect of it, retirement planning isn’t really on your mind. Until your tax advisor suggests you do something. Let’s review a few options.SEP IRA – There are many different IRAs, and this is one. Used for typically smaller firms – often family owns and works at the company- contributions are 100% employer money. So let’s say you own Tom’s Awesome Yummies(abbreviation TAY). Tom and his wife and Tom’s mom and son work at TAY. The business is booming and the tax advisor has suggested that you use some profits for a retirement account for the firm. Tom’s mom is not making any contributions from her paycheck. All the monies that are placed in the SEP IRA are from Tom’s Awesome Yummies. In 2013, the maximum contribution to a SEP IRA is the lesser amount of $51,00 or 25% of net income. SEP IRAs do not have ongoing requirements for contributions. Please note that this is only a brief overview of SEP IRAs, you should contact a financial professional to help you determine if this is a good fit for your company.SIMPLE IRA – A SIMPLE plan is yet another of the many types of IRAs available. This is business retirement plan used for companies with 100 or fewer employees who earned $5,000 or more during 2012. A SIMPLE IRA must be opened before October 1stof the current year. Contributions from the firm are required every year that the plan is in place while employee contributions are not required. In 2013, the maximum employee contribution amounts are $12,000 plus a $2,500 catch-up contribution if you are over 50 years-old. Once again there are many more details to understand about SIMPLE IRAs but that’s why there are financial advisors. There is no vesting schedule. The money is the employees once it is contributed. Early withdrawals may result in taxes or penalties.401(k) – this plan offers more flexibility but it can have higher annual fees for the company. Contributions may be made by employees ONLY, firms can match if they choose, or the firm alone may contribute to an employee 401(k) account. A vesting schedule may be put in place for company contribution to a 401(k) account.Got questions? Call a financial professional soon so you can weigh your options before October 1st.Citations:http://money.usnews.com/money/blogs/On-Retirement/2013/06/10/4-retirement-plan-options-for-small-businesseshttp://www.forbes.com/sites/stuartrobertson/2011/03/29/the-top-three-retirement-plans-for-small-business/How many IRAs – http://www.fool.com/money/allaboutiras/allaboutiras02.htmMarion Syversen, MBANorumbegaFinancial207.862.2952Marion@NorumbegaFinancial.comCheck out our website that includes weekly streaming videosWWW.NorumbegaFinancial.com Disclosure:Only securities and advisory services offered through Wall Street Financial Group, Inc. Registered Investment Advisor. Member FINRA/SIPC. Wall Street Financial Group, Inc. and Norumbega Financial are separate entities, independently owned and operated. CR9424


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