The non-elective contribution option
2018年10月8日 コンピュータWhat are the various retirement plan options available for a small business owner and in your opinion, which would work best for me?
-- Wanda S. The cost of the contributions is also deductible as a business expense.
Let me give you a quick overview of a few of the retirement plans available to small businesses so you at least have an idea of whats out there before you start your search for a good financial advisor. Find the richest, stingiest man in town and ask who his advisor is.
The best way to find a good financial advisor is to ask for referrals from your most successful friends and associates. If all goes well you will be doing business with this person for many years to come, so make sure the relationship feels comfortable to you and that you are confident in the advisors ability to manage your money.
This is a complex topic and Ive just tipped the iceberg here, but hopefully this will give you enough information to get the investment ball rolling.
Heres my best advice on retirement plans: find yourself a financial advisor (or financial planner) who is has experience working with small businesses and have him or her explain the options available and make a recommendation as to the type of plan best suited for you and your business.Q: I own a small decorating business and Ill be the first to admit that I dont know anything about taxes or retirement plans.
The advantages of a SIMPLE IRA for your employees include: contributions are immediately 100% vested; contributions and earnings are tax-deferred until withdrawal; employees can contribute 100% of earned income up to $10,000 for 2005; and employees can direct their own investments within the IRA. It should be a big seller among the high brow, comb-over crowd. A SEP is an option if you earn a self-employed income from a full or part time business, even if you are covered by a retirement plan at your fulltime job. You should also make sure the advisor is a good fit for your personality and your business. When I say financial advisor Im not talking about your know-it-all brother-in-law or your accountant.
The non-elective contribution option requires that the company contribute 2% of every employees earned income to the plan on the employees behalf regardless of whether or not the employee contributes to the plan himself. A SEP allows you to contribute up to 25% of earned income, up to $41,000 for 2004 and $42,000 for 2005. Id like to set up a 401(k) or an IRA or some other kind of retirement plan for me and my three employees. Withdrawals taken after the first two years are subject to a 10% early withdrawal penalty. Withdrawals within the first two years are subject to a 25% early withdrawal penalty. The business can be a sole proprietorship, a partnership, or a corporation, including S corps. You can make salary deferrals http://www.sunrisetech-china.com/product/pu-toys-gifts/ to this type of plan of up to $14,000 for 2005.
As the employer, the advantages of a SIMPLE IRA include: company contributions to the plan are tax deductible as a business expense; plan documents are simple and easy to administer; administration costs are low; and there is no government reporting required by the employer. Your investments also grow tax-deferred until withdrawal. Meet with several advisors, explain your situation, and ask for their recommendations. I can tell you what works best for me and my business, but youll need to do your homework and seek professional advice to figure out what would work best for you.
Next is the Simplified Employee Pension Plan or SEP IRA. As a side note, I hear that Donald Trump is coming out with his own line of hair care product soon to be called Big Head. Matching contributions means that the business matches the elective deferral contributions made by employees.
At first you might cringe at matching your employees contributions, but as the business owner and an employee yourself this can be great news.
A: Wanda, I appreciate your confidence in my humble opinion, but asking me for financial advice is like asking Donald Trump for a recommendation on hair care products. Each allows you to make pre-tax contributions to the plan, which lets you save for retirement and lessen your taxable income by the amount of the contribution.
As a small business you basically have three types of retirement plans that you can take advantage of: the Self-Employed 401(k); the Simplified Employee Pension Plan or SEP IRA, and the Savings Incentive Match Plan for Employees or SIMPLE IRA.
With a SIMPLE IRA you and your eligible employees may contribute up to 3% of earned income (with a maximum contribution of $10,000) on a pre-tax basis to individual SIMPLE IRAs. You must deduct Social Security and Medicaid from your gross income, but you can then make your SIMPLE IRA contribution before other taxes are levied, effectively lowering your taxable income.
My preferred type of retirement plan is the Savings Incentive Match Plan for Employees or SIMPLE IRA. The SIMPLE IRA was created to make it easier for small businesses with 100 or fewer employees to offer a tax-advantaged, company sponsored retirement plan. For example, if the employee opts to contribute 3% of his salary to the plan, the employer must match the 3% contribution.
A Self-Employed 401(k) is an option for self-employed individuals or business owners with no employees other than a spouse.
Like a traditional IRA, you can withdraw money from a SIMPLE IRA at any time; however distributions within the first two years of participation are subject to higher early withdrawal penalties than traditional IRAs or Roth IRAs. The formula is 1% mousse, 1% liquid nails, and 98% hot air. Im talking about a broker or financial planner (or other licensed professional) who has a proven track record of making his clients money and is an expert on IRAs, 401(k)s, mutual funds, etc.
. As an employee of your own business you can contribute up to $10,000 to your SIMPLE IRA and the business can then match your contribution dollar-for-dollar, which means that you can put up to $20,000 in tax free dollars into the plan per year.
As the employer you must make matching or non-elective contributions into your employees SIMPLE IRA accounts. For 2005 the maximum contribution you would be required to make is $4,200.
-- Wanda S. The cost of the contributions is also deductible as a business expense.
Let me give you a quick overview of a few of the retirement plans available to small businesses so you at least have an idea of whats out there before you start your search for a good financial advisor. Find the richest, stingiest man in town and ask who his advisor is.
The best way to find a good financial advisor is to ask for referrals from your most successful friends and associates. If all goes well you will be doing business with this person for many years to come, so make sure the relationship feels comfortable to you and that you are confident in the advisors ability to manage your money.
This is a complex topic and Ive just tipped the iceberg here, but hopefully this will give you enough information to get the investment ball rolling.
Heres my best advice on retirement plans: find yourself a financial advisor (or financial planner) who is has experience working with small businesses and have him or her explain the options available and make a recommendation as to the type of plan best suited for you and your business.Q: I own a small decorating business and Ill be the first to admit that I dont know anything about taxes or retirement plans.
The advantages of a SIMPLE IRA for your employees include: contributions are immediately 100% vested; contributions and earnings are tax-deferred until withdrawal; employees can contribute 100% of earned income up to $10,000 for 2005; and employees can direct their own investments within the IRA. It should be a big seller among the high brow, comb-over crowd. A SEP is an option if you earn a self-employed income from a full or part time business, even if you are covered by a retirement plan at your fulltime job. You should also make sure the advisor is a good fit for your personality and your business. When I say financial advisor Im not talking about your know-it-all brother-in-law or your accountant.
The non-elective contribution option requires that the company contribute 2% of every employees earned income to the plan on the employees behalf regardless of whether or not the employee contributes to the plan himself. A SEP allows you to contribute up to 25% of earned income, up to $41,000 for 2004 and $42,000 for 2005. Id like to set up a 401(k) or an IRA or some other kind of retirement plan for me and my three employees. Withdrawals taken after the first two years are subject to a 10% early withdrawal penalty. Withdrawals within the first two years are subject to a 25% early withdrawal penalty. The business can be a sole proprietorship, a partnership, or a corporation, including S corps. You can make salary deferrals http://www.sunrisetech-china.com/product/pu-toys-gifts/ to this type of plan of up to $14,000 for 2005.
As the employer, the advantages of a SIMPLE IRA include: company contributions to the plan are tax deductible as a business expense; plan documents are simple and easy to administer; administration costs are low; and there is no government reporting required by the employer. Your investments also grow tax-deferred until withdrawal. Meet with several advisors, explain your situation, and ask for their recommendations. I can tell you what works best for me and my business, but youll need to do your homework and seek professional advice to figure out what would work best for you.
Next is the Simplified Employee Pension Plan or SEP IRA. As a side note, I hear that Donald Trump is coming out with his own line of hair care product soon to be called Big Head. Matching contributions means that the business matches the elective deferral contributions made by employees.
At first you might cringe at matching your employees contributions, but as the business owner and an employee yourself this can be great news.
A: Wanda, I appreciate your confidence in my humble opinion, but asking me for financial advice is like asking Donald Trump for a recommendation on hair care products. Each allows you to make pre-tax contributions to the plan, which lets you save for retirement and lessen your taxable income by the amount of the contribution.
As a small business you basically have three types of retirement plans that you can take advantage of: the Self-Employed 401(k); the Simplified Employee Pension Plan or SEP IRA, and the Savings Incentive Match Plan for Employees or SIMPLE IRA.
With a SIMPLE IRA you and your eligible employees may contribute up to 3% of earned income (with a maximum contribution of $10,000) on a pre-tax basis to individual SIMPLE IRAs. You must deduct Social Security and Medicaid from your gross income, but you can then make your SIMPLE IRA contribution before other taxes are levied, effectively lowering your taxable income.
My preferred type of retirement plan is the Savings Incentive Match Plan for Employees or SIMPLE IRA. The SIMPLE IRA was created to make it easier for small businesses with 100 or fewer employees to offer a tax-advantaged, company sponsored retirement plan. For example, if the employee opts to contribute 3% of his salary to the plan, the employer must match the 3% contribution.
A Self-Employed 401(k) is an option for self-employed individuals or business owners with no employees other than a spouse.
Like a traditional IRA, you can withdraw money from a SIMPLE IRA at any time; however distributions within the first two years of participation are subject to higher early withdrawal penalties than traditional IRAs or Roth IRAs. The formula is 1% mousse, 1% liquid nails, and 98% hot air. Im talking about a broker or financial planner (or other licensed professional) who has a proven track record of making his clients money and is an expert on IRAs, 401(k)s, mutual funds, etc.
. As an employee of your own business you can contribute up to $10,000 to your SIMPLE IRA and the business can then match your contribution dollar-for-dollar, which means that you can put up to $20,000 in tax free dollars into the plan per year.
As the employer you must make matching or non-elective contributions into your employees SIMPLE IRA accounts. For 2005 the maximum contribution you would be required to make is $4,200.
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