Meridian Star

Business

June 29, 2014

Consider the benefits of a retirement plan for your business

MERIDIAN —

Does your business offer a retirement plan for employees? If not, consider setting one up. A retirement plan may be beneficial for several reasons. It can help you to recruit employees as part of your overall compensation package. You can help your employees by giving them a tax-advantaged way to save for their retirement. A plan can also provide tax credits or deductions for your business. Finally, it can help you provide for your own retirement.

    Small businesses and the self-employed can choose from a variety of plans specially designed to keep costs low and administration relatively simple.

    SEP-IRA Plans. Perhaps the easiest plan to set up is a simplified employee pension plan (SEP). With a SEP, you make retirement plan contributions for your employees. The contributions are a percentage of their earnings, generally up to 25 percent, subject to dollar limits. The contributions you make go into individual retirement accounts set up for each employee. Employees manage the investments in their accounts, just like a traditional IRA. You don’t have to contribute every year, but if you do, you can’t discriminate among employees. You have until the due date of your tax return to set up a plan for the previous tax year.

    SIMPLE Plans. SIMPLE plans allow your employees to defer part of their salary into their retirement accounts. You, as employer, can either match those contributions up to certain limits, or you can make nonelective contributions to each eligible employee.

    Generally, you can set up a SIMPLE plan if you have 100 or fewer employees, subject to some additional restrictions. The plans come in two varieties – SIMPLE IRAs and SIMPLE 401(k)s. Generally, they’re slightly more complex than SEPs to set up and administer.

    Qualified Plans. Qualified plans come in many flavors. Generally, they require a trustee and are more complex and costly to administer.

    David Compton is a Certified Public Accountant with offices in Meridian and Birmingham, Ala.

1
Text Only
Business
Biz Marquee
New Today
Poll

A majority of House members approved a motion to sue President Obama for exceeding his constitutional boundaries. The lawsuit will focus on the presidents overhaul of health care. Do you think the lawsuit is warranted?

Yes
No
     View Results
Facebook
Facebook
Twitter Updates
Follow us on twitter
AP Video
Renewed Violence Taking Toll on Gaza Residents 2 Americans Detained in North Korea Seek Help US Employers Add 209K Jobs, Rate 6.2 Pct House GOP Optimistic About New Border Bill Gaza Truce Unravels; Israel, Hamas Trade Blame Raw: Tunisia Closes Borders With Libya Four Rescued From Crashed Plane Couple Channel Grief Into Soldiers' Retreat WWI Aviation Still Alive at Aerodrome in NY Raw: Rescuers at Taiwan Explosion Scene Raw: Woman Who Faced Death Over Faith in N.H. Clinton Before 9-11: Could Have Killed Bin Laden Netanyahu Vows to Destroy Hamas Tunnels Obama Slams Republicans Over Lawsuit House Leaders Trade Blame for Inaction
Hyperlocal Search
Premier Guide
Find a business

Walking Fingers
Maps, Menus, Store hours, Coupons, and more...
Premier Guide