Simplified Employee Pension (SEP) Archives

Making Sense of Employer-Sponsored Retirement Plan Options

By Office Staff|2021-06-22T16:05:40-07:00June 22, 2021|Categories: Business Advice|Tags: 401(k), Defined Benefit Plans, Employer Sponsored Retirement Plan, IRA, Profit Sharing, Roth IRA, SIMPLE IRA, Simplified Employee Pension (SEP)|0 Comments

Establishing a retirement plan for employees can pay off in big ways, and we’re not just talking about the benefits for employees. Small business owners stand to benefit as well.

Small business benefits include:

Retirement plans improve recruitment and retention of better employees. This is especially important now that COVID restrictions are being lifted, and employers are struggling to entice their best employees back into the office.
Employer contributions are tax-deductible.
Assets in the plan grow tax-free.
Plan options are flexible.
Tax credits and other tax relief can help offset costs.

Employee benefits include:

Employee contributions can reduce their taxable income, lowering their taxes.
Contributions and profits grow tax-free until they’re withdrawn.
Contributions can be automated through payroll deductions, making it easier to save for retirement.
Through compounding interest (earning interest on savings and interest), contributions grow faster over time.
Retirement accounts can be carried from one employer to another.
Some employees may be eligible for the saver’s credit — a federal income tax credit on top of the tax deduction already allowed for contributions to a retirement account.
Some plans let employees defer a portion of their compensation into the plan, which can help employees save money on taxes.
Employees have peace of mind knowing that they’re improving their financial security for their future and retirement.

Choosing the Right Retirement Plan to Offer Your Employees

After deciding to offer a plan, you face the challenge of choosing which plan delivers the most bang for the buck — for both you (the business owner) and your employees. Several options are available, which is great, but without knowing the differences, picking a plan can be so overwhelming that you put off the decision indefinitely.

With that in mind, in this post, we describe the most common retirement plan options — from simplest to most complex — and present the key characteristics of each. As a small business owner, you’ll want to adopt a plan that’s tailored specifically to Continue reading… Continue reading… Continue reading…

Leveraging the Tax Savings Power of Retirement Accounts, Part 5: Small Business Guide to Reducing Your Tax Burden Legally

By Office Staff|2020-10-08T20:50:40-07:00August 20, 2020|Categories: Small Business Guide to Legally Reducing Your Tax Burden|Tags: Defined Benefit Plans, IRA, Retirement Accounts, Roth IRA, Savings Incentive Match Plan for Employees (SIMPLE), SIMPLE IRA, Simplified Employee Pension (SEP), Tax-deferred Retirement Accounts|0 Comments

Some of the most powerful tools for cutting taxes are tax-deferred retirement accounts, which enable you to invest money tax-free now, then pay taxes on it when you withdraw it in your retirement years. As a small-business owner, you can take advantage of several different types of tax-deferred retirement accounts, including individual retirement accounts (IRA), a simplified employee pension (SEP), a Savings Incentive Match Plan for Employees (SIMPLE) IRA, 401(k), Defined Benefit Plans, and even the option of a hybrid plan. Roth IRAs and permanent life insurance plans are two more tools that can benefit you when planning for retirement.

Many people have one or more retirement accounts, which is great, but few have a retirement plan — a highly specific approach for using retirement accounts to maximize their tax savings and achieve their retirement goals. Without a properly crafted retirement plan in place, mistakes are more likely, such as choosing an account type with a contribution limit that’s too low, exposing yourself to high taxes when you retire, or paying too much in account/plan management fees.

For example, depending on your income and the type of retirement account, your contribution limit varies considerably. If you earn $90,000, for example, you can contribute $16,200 to a SIMPLE IRA, or $22,500 to a simplified employee pension (SEP), or $42,000 to a 401(k). (Note: That’s before any catch-up contributions you can start making at the age of Continue reading… Continue reading… Continue reading…