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Retirement Plans and Preparation

Pension and Profit Sharing

As a small business owner, offering a pension or profit-sharing plan can make you an attractive employer since your employees know they will have the opportunity to have a retirement plan in place that is flexible. As an employee, a pension or profit sharing plan can help you have a steady source of income coming in once you have decided to retire.

401(k) Plans

It’s never too early to start thinking about retirement, and many employers offer 401(k) plans to their employees that are never taken advantage of. As an employer, offering 401(k) plans to your employees has huge tax advantages and can help your employees prepare for their financial futures. As an employee, these plans allow you to make pre-taxed contributions, which lowers the amount of income that your paycheck will be taxed. The good news is that if you wait until you are 59.5 years old to touch your 401(k), you can avoid huge taxes penalties.

IRAS:

  • SEP (Simplified Employee Pension): SEP plans are an easy retirement plan option for small businesses to offer to their employees. With flexible rates for contribution amounts up to 25% each year along with low start-up costs, these plans are a great option for many employers. SEP plans will give you a sense of fulfillment as an employer, knowing that you are contributing to your employees’ financial future.

  • SIMPLE (Savings Incentive Matching PLan for Employees): These IRAs are a great option for small businesses that have typically under 100 employees and allow for employer and employee contributions to be made. These plans inspire and empower your employees to take an active approach to their retirement since employees may elect to contribute in addition to your required contributions. These plans are easy to set up and, with their low costs, are a great beginning retirement plan for many businesses to offer.

  • Roth IRAs and Education 529 Savings Plans: Both Roth IRAs and 529 College Savings Plans are great ways to help save money for your child’s educational future. Roth IRA’s have income caps of $176,000 and have an annual contribution max of $5,500, but allow you more flexibility if your child does not decide to go to college. A 529 plan does not have an annual income cap and has much higher annual contribution amounts. Both of these vehicles have unique advantages to them as well as risks, costs and limitations  and LCORE will be happy to sit down with you to decide which savings plan is appropriate for your family.