Small Business Retirement
If you’re self-employed or have your own business, you can have a small business retirement plan. It’s a great way to save for your own future, get tax breaks for your business and offer competitive employee benefits. Start by selecting the right small business retirement plan for you.
401(k)/Safe Harbor/Automatic Enrollment Safe Harbor
401(k) plans have become a widely accepted retirement savings vehicle for small businesses. With a traditional 401(k) plan, employees can choose to defer a portion of their salary. A Safe Harbor 401(k) plan is intended to encourage plan participation among rank and file employees and to ease administrative burden by eliminating the tests ordinarily applied under a traditional 401(k) plan. Automatic Enrollment Safe Harbor 401(k) plans can increase plan participation among rank-and-file employees in addition to the benefits of the Safe Harbor plans. This plan is for employers who want a high level of participation, and also have highly compensated employees whose contributions might be limited under a traditional plan. Visit the 410(k) Administration Page
Individual or Solo 401(k)
If you like the features of a 401(k) but are self employed and the only employee, this option is an affordable alternative.
SEP IRA (Simplified Employee Pension)
A SEP allows employers to set up a type of IRA for themselves and each of their employees. Employers must contribute a uniform percentage of pay for each employee, although they do not have to make contributions every year.
SIMPLE IRA (Savings Incentive Match Plan for Employees)
This savings option is for employers with 100 or fewer employees and involves a type of IRA. A SIMPLE IRA plan allows employees to contribute a percentage of their salary each paycheck and requires employer contributions.
Small Business Risk Management
How to Successfully Exit a Business
Owners invest large amounts of time, energy, and money to grow their businesses into what may become one of their largest assets. The business provides income, jobs for their employees and it contributes to the community. With proper planning, a business owner can address the three ways to exit a business. Succession plans should not only cover retirement, but death and disability as well. Visit the Business Exit Strategies Page
Business Overhead Expense (BOE)
Business overhead expense (BOE) insurance is designed to reimburse a business for overhead expenses in the event a business owner becomes disabled.
Keyman Insurance
The business owns life insurance on a key employee to protect itself against the financial loss caused by the death of that person. When recruiting and training a replacement is expensive it can provide a cash cushion to the business through the transition.
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Quick facts – 401(k)
| Participants | |
| Employer contributions | For 2009, employee plus employer contribution limit is $49,000 ($54,500 if the employee is age 50 or older).* Deductible as a business expense and not required every year. |
| Employee contributions | For 2009, $16,500 limit ($22,000 if age 50 or older). Cannot exceed 100% of compensation. |
| Investment choices | Varies based on Brokerage Account options or Investment Manager lineup. |
| Eligibility | No age or income restrictions. |
* The eligible compensation limit, indexed for inflation by the IRS, is $245,000 for 2009.
Quick facts – Individual or Solo 401(k)
| Participants | Sole proprietors or partners who have no common-law employees. Spouses may be eligible if they are employed in the business. |
| Employer contributions | For 2009, employee plus employer contribution limit is $49,000 ($54,500 if the employee is age 50 or older).* Deductible as a business expense and not required every year. |
| Employee contributions | For 2009, $16,500 limit ($22,000 if age 50 or older). Cannot exceed 100% of compensation. |
| Investment choices | Varies based on Investment Manager and Third Party Administrator guidelines. |
| Eligibility | No age or income restrictions. |
* The eligible compensation limit, indexed for inflation by the IRS, is $245,000 for 2009.
Quick facts – SEP IRA
| Participants | Employers can establish a SEP (Simplified Employee Pension) plan for themselves. Their employees can contribute to personal IRA accounts. |
| Employer contributions | For 2009, up to 25% of the participant’s compensation or $49,000, whichever is less. * Deductible as a business expense and not required every year. |
| Employee contributions | For 2009, a personal contribution limit of up to $5,000 (or $6,000 if age 50 or older) into an individual SEP, traditional, or Roth IRA. |
| Investment choices | Varies based on Brokerage Account options or Investment Manager lineup. |
| Eligibility | Generally, employees must be allowed to participate if they are over age 21, earn at least $550 annually, and have worked for the same employer in at least three of the past five years. |
* Net compensation for self-employed individuals is generally the net profit from IRS Schedule C minus one-half of the individual’s self-employment tax. The eligible compensation limit, indexed for inflation by the IRS, is $245,000 for 2009.
Quick facts – SIMPLE IRA
| Participants | Business owners with 100 or fewer employees can establish a SIMPLE (Savings Incentive Match Plan for Employees) IRA. |
| Employer contributions | Option 1: Match up to 3% of each employee’s compensation or $11,500, whichever is less. Option 2: Contribute 2% of each eligible employee’s compensation up to $4,900 for 2009.* Contributions are deductible as a business expense. |
| Employee contributions | For 2009, up to $11,500 ($14,000 if age 50 or older). Employees are not required to contribute in any given year. |
| Investment choices | Varies based on Brokerage Account options or Investment Manager lineup. |
| Eligibility | No age restrictions. Employees must earn a minimum amount specified by the employer during any two preceding years and expect to earn at least $5,000 in the current year. |
*The eligible compensation limit, indexed for inflation by the IRS, is $245,000 for 2009.