Small Business Retirement Plans: Which Option Is Right for You?

As a small business owner, are you offering a retirement plan to your employees? Selecting the right plan for your business can help incentivize employee loyalty, while helping you plan for your own retirement. Making the appropriate choice for your small business retirement plan for your business may seem like a challenge, however ePlan Services is here to help you with your options.  

What are my retirement plan options?

If you’re searching for the right plan for your small business, you’re in luck. There are several options available for your small business retirement plan needs. A knowledgeable retirement sales expert can help you determine which of these options will best suit your small business.

Traditional 401(k) Plan

This type of plan will allow your employees to get a jump start on saving for their retirement by placing their pre-tax dollars into an account to be withdrawn at the time of retirement.

Offering your employees a traditional 401(k) plan may also help incentivize their loyalty to your company. Starting up a new plan may also qualify you for numerous tax credits.

Roth 401(k)

A Roth 401(k) allows participants to contribute post-tax dollars to their 401(k) accounts, so they can make tax free withdrawals when they retire.

Solo 401(k) Plan

 A solo 401(k) plan is a 401(k) for solo business owners with no employees. This type of plan will allow you to get a head start on saving for your own retirement. To qualify for a solo 401(k), you only need to own a business and have no employees. If you run a business with your spouse, they may also qualify to participate. With a solo 401(k), you can receive:

• Tax breaks: Choose from a traditional or Roth option.
• Loan options: Business owners can borrow from their solo 401(k) without facing penalties
• Easy setup: Enrolling in solo 401(k) plan is made simple because it is designed for only one employee.

SIMPLE IRA

A Savings Incentive Match Plan for Employees (SIMPLE) is meant to help employees save for retirement as well as receive employer contributions. If your business has more than one employee and fewer than 100, you may be eligible for a simple IRA retirement plan. With a SIMPLE IRA in place, employers must contribute to employee plans, and the funds must be vested immediately.

Safe Harbor 401(k)

A safe harbor plan allows businesses to skip certain compliance tests. A safe harbor plan also requires employer contributions. There are three types of employer contribution options:

• Basic match: The employee must contribute to their 401(k) account in order to receive an employer match. The employee will match up to 100% of the first 3% of employee contributions.
• Enhanced match: Like the basic match, employees must contribute to their 401(k) account to receive an employer match. The enhanced match is distributed on a tier system. The employer can match 100% of the first 4%, 5%, and 6% of each employee’s contribution.
• Non-elective contribution: An employer must contribute 3% of their employees’ salary.

What are the benefits of offering a retirement plan as a small business owner?

Offering your employees a retirement plan option may not only incentivize employee retention and loyalty, but it may also prove advantageous for the employer. Depending on the retirement plan option, you may benefit from perks like tax breaks and compliance testing exemptions.

How do I find a small business retirement plan provider?

When choosing a plan provider, it is best to first assess the needs of your business. Ask yourself questions such as, do you plan to scale up? Are you looking to avoid certain compliance tests? Are you interested in providing your employees with an employer contribution?

Once you can answer these questions, you’ll have a basic understanding of the type of plan you’re looking for. Your next step would be to research providers that offer your preferred plans and consider their fees and customer support. Plan provider fees may vary based on your needs. You should also take into account the support they provide to their customers. Are they hands on? ePlan services makes plan setup a breeze.