How To Start A Small Business Employee Retirement Plan
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How To Start A Small Business Employee Retirement Plan

Giving employees a secure foundation for a financially comfortable retirement is simple. Just set up one of the retirement plans fit for a small business to offer to their employees in the well known fold seeking a rewarding opportunity. And, add up the contributions made to the accounts. A regular return on the investment is guaranteed.

American workers agree. A company that offers a convenient retirement plan can convince them to stop playing the job market and join the business.

Getting the plan started and the employees enrolled is simple.

1. Make a list of the simple retirement plan options a small business can invest in without making complicated plans. Do not miss on any of the popular choices-- the 401(k) plans well known throughout the business community and two IRA plans designed for small business, the SIMPLE IRA (Savings Incentive Match Plan for Employees of Small Employers) and the SEP (Simplified Employee Pension) plan.

2. Rate each option. Consider how much the boss and the employee have to work together to make the plan work. And how much retirement money each employee is offered.

The SEP plan gives an employer the best opportunity to give their employee a generous retirement. Employer contributions up to 25 percent an employees salary are allowed. The contributions are easily made to an employee's traditional IRA account at a financial institution. No employee contributions deducted from the paycheck to handle.

And, when to make contributions and how much are decisions the employer always has in their hands. No pension plan obligations on the amount due each employment period.

Employers that have 100 or fewer employees can choose the next most simple tax deferred option. The SIMPLE IRA. Employees can decide to make contributions to their account and have the employer match up to 3 percent of earnings. Or, the company can match up to 2 percent for an employee that doe snot make their own contributions.

With either plan, the company can save up to $500 by using a tax credit for the costs of setting up the retirement plan.

401(k) plans, except the automatic enrollment 401(k), give employees the best options for investing their own money earned at work and put into a retirement account. There are no necessary choices. Pick a stock, a bond, a mutual fund or a money market account. Even a custom combination. Americans who do not need to keep a lot of cash on hand can steadily invest additional money taken out of their paycheck. Employee contributions, employer contributions, and matched contributions are each an option employees have successfully depended on to save for retirement.

Putting away the money is not as simple as with the two IRA plans. The company has to set up a trust account to deposit the contributions in and pick a trustee to manage the trust.

3. Set up the retirement plan. Contact the financial institution to set one up and keep in touch. If the plan is a 401(k), create a trust account and give a dependable person the trustee position.

4. Tell employees about the plan and sign them up.

Hand out the typical information sheets to employees that get hired at the company. and talk about he options and take any questions before they sign.

5. Make contributions to the retirement accounts. Adding more dollars and cents to an employee's retirement funds is simple. Just make the contributions each employment period and watch the account grow.


U. S. Employment Benefits Security Administration, SIMPlE IRA Plans for Small Businesses.

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