Retirement Plans for Small Business Owners: The BIG 3!
As a small business owner, you have a lot on your plate. You're responsible for the day-to-day operations of your business, as well as the long-term success of your enterprise. One of the most important things you can do for your business is offer your employees a retirement plan.
A retirement plan can help you attract and retain top talent and help your employees save for retirement. Different retirement plans are available, so choosing the right one for your small business is essential.
Below is a recap of the three retirement plans for small business owners we highlighted over the past few weeks:
401(k) Plan
A 401(k) plan is an employer-sponsored retirement plan that allows employees to save for retirement pre- or post-tax. Employees can choose to defer a portion of their paycheck into their 401(k) plan, and the employer may also make matching contributions.
401(k) plans offer many advantages, including:
- High contribution limits
- Tax-deferred savings
- Potential for employer matching contributions
- A variety of investment options
However, 401(k) plans can also be complex and expensive to administer, making them a less attractive option for small businesses with limited resources. Working with our Dixon Financial Group, LLC LPL Financial Advisors will help you make the best choice when deciding on a retirement plan.
SIMPLE IRA
A SIMPLE IRA (Savings Incentive Match Plan for Employees) is a type of retirement plan designed for small businesses with fewer than 100 employees. SIMPLE IRAs can be easier to set up and administer, and they offer many advantages, including:
- High contribution limits
- Tax-deferred savings
- Potential for employer matching contributions
SEP IRA
A SEP IRA (Simplified Employee Pension) is a retirement plan designed for small businesses and self-employed individuals. SEP IRAs are easy to set up and administer when working with our DFG advisors. Some of the advantages, including:
- Very high contribution limits
- Tax-deferred savings
However, SEP IRAs also have some limitations and variations, such as:
- All contributions come from the employer only. (Note: Your employees can work with our advisors to start funding an IRA, ROTH IRA or both within the contribution limits.)
- ROTH contribution option - Starting in 2023, SEP IRAs have a ROTH contribution option.
Which plan is right for your small business?
The best retirement plan for your small business will depend on several factors, including the size of your business, your budget, and the needs of your employees. It's essential to carefully consider all your options before deciding.
As a business owner, you will be confident that the Dixon Financial Group, LLC LPL Financial Advisors have you, your company and your employees' best interest. Please consult with our advisors when you are ready to learn more about retirement fund options for your employees or if you are an employee and need to know how to start your retirement savings journey.
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David S. Dixon, CFP®
Jacob S. Bierstedt, CFP®, ChFC
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