Retirement Savings Options for Small Businesses in 2013

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Today’s small business owners face many challenges when it comes to making their businesses grow and succeed. Retirement planning often takes a back burner to what business owners feel are more pressing concerns. However, a retirement plan isn’t nearly as complicated, or as expensive, as you might have imagined. With these retirement savings options tailor-made for small businesses, you’re sure to find a plan that’s right for your business needs.

401 (k) Plans

Small businesses tend to favor 401 (k) plans above other options available to them. With this retirement savings option, employees may defer parts of their salaries into an employer-sponsored 401(k) program. The deferrals are commonly made with pre-tax income and employers may opt to match the contributions (or a percentage of the contributions) of their employees. The pre-tax contributions of employees and employers alike are not taxed until the funds – and their earnings – are distributed.

IRAs

This is the simplest plan to offer as it simply allows employees to purchase IRAs through payroll deductions. Employees make the decisions about the amount they contribute and it simply allows them to set aside the funds each month in small, tax-deductible, increments rather than paying one lump-sum at the end of the year. As another option, small business owners can invest, and encourage their employees to enroll in a Roth IRA, which provides a benefit of tax-free disbursement.

Simplified Employee Pensions

These are sometimes referred to as SEPs. These are IRAs that are created by employers contributing a percentage of each employee’s pay. The percentage must be uniform and cannot exceed 25 percent of the total pay of $51,000 for 2013. Employers can change contributions from year to year according to economic conditions within the business.

Because there are several different retirement savings plans available for small businesses today, it’s a good idea to shop around to find the best match for your business situation.

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