Small Business Retirement Planning
Small business owners have a lot to worry about—healthy profits, happy customers, and steady business growth, to name a few. But more often than not, small businesses get lost in the everyday hustle that they forget to plan to develop employee benefits for retirement. Over 35 percent of small business owners are not confident about their own retirement savings, and over 75 percent of small business owners do not offer a 401(k) to help themselves and their employees secure a better retirement.
Here are some of the reasons that small business owners give for not taking advantage of financial retirement options:
- “It’s expensive.”
- “It’s too complicated to set up.”
- “I don’t know who to trust.”
These are just a few misconceptions small business owners have about retirement planning. With Lynn Financial LLC, setting up retirement plans can be easy to implement, and beneficial for you and your employees.
What options do small businesses have?
There are five different options small business owners have for retirement plans:
401(k) – Cash is taken out of the employee’s payroll, and will be saved for retirement. Employees can decide how much they contribute to their plan, and employers have the choice whether or not to contribute to employee plans. All employer contributions are considered deductible business expenses, and every single plan is customizable to specific business needs.
SIMPLE IRA – Available to companies with fewer than 100 employees, SIMPLE IRAs work just like traditional IRAs. Employees can set pre-tax money aside and allow it to grow for retirement, and employers can write off their contributions as tax-deductible business expenses—all with low costs and a variety of options for contribution structures.
SEP IRA – As an employer-funded retirement plan, SEP IRAs allow for employers to control contribution amounts, but gives employees the power over how the contribution is invested. Easy setup, low costs, and tax-deductible contributions.
Payroll Deduction IRA – Available to any employer or sole proprietor, Payroll Deduction IRAs are a no-hassle, no cost option that allows employees to grow tax-free money that’s automatically deducted from their paychecks. There’s virtually no administration from the employer, and there’s flexibility for when, if, and how much is contributed for the employee.
Employees have two options for Payroll Deduction IRAs:
- ROTH IRA: Grows tax free, and the employee can make withdrawals from the contribution portion without penalty or taxes.
- Traditional IRA: Tax deductible, and money grows tax-free.
Why are employee retirement plans important?
- Business owners can save money for their own retirement
- Business owners may be able to claim a tax credit for some of the necessary costs of starting a qualified plan
- Retirement benefits attract and keep better employees
- Employees become more productive, especially if the plan is connected to the company’s profits
- Owners can deduct all employer contributions from business taxes
Why choose Lynn Financial LLC?
With Lynn Financial LLC, you have an experienced financial team working for your business, dedicated to helping you develop custom retirement plans that meet the needs of you and your employees. Whether you’re looking to start from scratch, or need a cost analysis of your current plan, we’re happy to help. Get started with Lynn Financial LLC today.