A retirement plan has lots of benefits for you, your business and your employees. Retirement plans allow you to invest now for financial security when you and your employees retire. As a bonus, you and your employees get significant tax advantages and other incentives.
Are you self-employed? Did you know you have many of the same options to save for retirement on a tax-deferred basis as employees participating in company plans? One of the many advantages of being a freelancer, independent contractor, or other self-employed person is the ability to control your own retirement plan. This both helps ensure a secure future and, because your plan contributions will likely be tax-deductible, makes financial sense.
- Employer contributions are tax-deductible.
- Assets in the plan grow tax-free.
- Flexible plan options are available.
- Tax credits and other incentives for starting a plan may reduce costs.
- A retirement plan can attract and retain better
employees, reducing new employee training costs.
- Employee contributions can reduce current taxable income.
- Contributions and investment gains are not taxed until distributed.
- Contributions are easy to make through payroll deductions.
- Compounding interest over time allows small regular contributions to grow to significant retirement savings.
- Retirement assets can be carried from one employer to another.
- Saver’s Credit is available.
- Employee has an opportunity to improve financial security in retirement.
Types & Uses of Retirement
Plans for Business/Group/Employees
Simplified Employee Pension (SEP) Plan: For self-employed people and small business owners who wish to make tax-deductible contributions of their income and that of their eligible employees.
Simple IRA Plan: For firms of 100 or fewer employees to establish an employee savings program for pre-tax contributions per year.
Profit Sharing Plan (Keogh** Plan): For business owners who
wish to make tax-deductible contributions of each participant's pay, and have
vesting and loan schedules not available with a SEP.
Money Purchase Pension Plan (Keogh** Pension Plan): For business owners with predictable incomes who wish to make pre-determined tax-deductible contributions of each Participant's pay.
Age-Weighted or Comparability Plan: For business owners who are older and more highly paid than most of their employees and wish to allocate contributions under a formula based on both age and salary.
Defined Benefit Pension Plan: For business owners who wish to contribute enough money each year to provide a specific benefit upon retirement. This may be beneficial to older employees with a high, stable income who need a rapid accumulation of assets over a short period of time.
401(k) Plan: For employers who wish to allow employees to make pre-tax contributions through payroll deductions of their pay.
Safe Harbor or DASH 401(k) Plan: For business owners who wish to give their employees the advantages of a 401(k) plan, while maximizing the amount they can put away for themselves.
403(b) Plan: For employees of public schools, non-profit hospitals and other certain tax-exempt organizations. Also known as a Tax-Sheltered Account.