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Information for Small Businesses

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How to Set up a 401k Plan for Small Business Employees - As top candidates weigh the pros and cons of different employment opportunities in a competitive job market, offering a 401k plan is among the best ways to help your business attract and retain quality talent. Additionally, other advantages such as tax benefits and owner retirement savings options make setting up a 401k plan a smart benefit option. However, business owners may believe that a 401k plan isn't right for them, are unclear of the benefits, or believe the administrative responsibilities are too cumbersome.

How to Choose a Small Business 401k Plan - In a time of record-low unemployment, small business leaders can't hope to compete for talent without the right retirement benefits. Most small businesses simply can't afford to set workers up with pensions, but they can provide defined contribution 401k plans. With so many providers on the market, though, how can they be sure they're picking the right one? The best ones have these key features.

Small Business and Retirement Savings: The Push for Multiple Employer Plans - Federal regulators and lawmakers have been moving toward making plans more attractive for small business by expanding a previously obscure concept: the "multiple employer plan," which is a single plan in which numerous small, unrelated companies sign up for a centrally administered retirement plan whose sponsor takes on the burdens of choosing investment providers, tracking contributions and account balances, communicating with participants, making distributions, dealing with government filing requirements, and resolving claims disputes.

A Guide to Retirement Savings for the Self-Employed - The self-employed have different approaches to consider in deferring income and investing some of their newly earned funds for retirement. This is a review some of the most common strategies a self-employed person could utilize and explore the pros and cons of each.

Resources

Directory of Solo 401k and Small Business Retirement Plan Providers: Click here to download.

Solo 401k Calculator available here.

A glossary retirement plan and investment terms available here.


401k Plans for Sole Proprietorships

Regulatory reform now allows Sole Proprietorships to set-up and contribute to a 401k plan. These are often called Solo 401k or Individual(k) plans. A number of vendors are beginning to market specific plans to meet this need.

We have put together a list of providers that offer these plans. Click here to obtain a copy of this list.

Calculator available. Click here to calculate how much you can contribute to a Solo 401k in comparison to a SEP or SIMPLE plan which have different limits.

General Features of a Solo 401k Plan:

Plan Establishment Sole proprietors with no additional employees other than the spouse of the proprietor or partnerships whose only employees are self-employed partners and their spouses.
Trustee and Plan Administrator Business Owner, Spouse or Partner or any combination, or any other designated third party.
Salary Deferral
Contributions
Up to $18,000 (not to exceed 100% of pay and no more than $270,000 of pay can be taken into account). Total salary deferral and employer maximum is $54,000.
Catch-up
Contributions
Individuals age 50 or older may contribute an additional $6,000 in salary deferrals beyond the $18,000 which does not count towards the maximum total contribution limit of $54,000.
Employer Contributions Up to 25% of pay (20% for self-employed) to a maximum of $54,000. Salary deferral contributions are also counted towards this limit.
Rollovers Rollovers and transfers allowed from traditional IRA, SEP, Qualified Plans or Keoghs (Profit Sharing, Money Purchase Pension, Defined Benefit), 401k, 403(b) and governmental 457 plans. SIMPLE IRAs are eligible for rollover after two year holding period is met.
Loans Available to all participants, including unincorporated business owners.
Government Reporting IRS 5500-EZ.

 

401k plans are subject to numerous and complex rules, regulations and tax qualification requirements. Be sure to consult with a qualified professional before making any decisions.



Information on Small Business Plans

Starting a small business retirement savings plan can be easier than you think. Here are some resources on a varity of retirement plans available to the small business person.

Employer Retirement Plans Comparison Chart for Small Businesses - Summary: This chart provides a comparison of the features and benefits that apply to retirement plans that can be sponsored/adopted by small business owners. Focus is on the areas that are important to the business owner to ensure that the plan that is chosen is the plan that is most suitable for the business.

Retirement Plan Comparison Chart

IRS Publication 560, Retirement Plans for Small Business.

DOL's 401k Plans for Small Businesses

401k Plans for Small Businesses

Choosing a Retirement Plan for Your Small Business - Summary: In this piece you will find a chart outlining the advantages of each of the most popular types of IRA-based and defined contribution plans and an overview of a defined benefit plan.

Retirement Plans FAQs Regarding SEPs

FAQs Regarding SIMPLE IRA Plans

SEP IRA Quick Reference Guide

SEP Retirement Plans For Small Businesses

SEP Vs SIMPLE IRA - Summary: This reference guide provides a comparison of some of the key features and benefits of these plans.

SIMPLE 401k Plans

SIMPLE IRA vs SIMPLE 401k's

Simple IRA Plans for Small Businesses


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