We are constantly getting messages about Social Security’s looming demise, the failure of privately run pension plans, and the impact that the baby boomers’ withdrawal from the market is going to have on the Stock Market. These messages, combined with the fact that many business owners who left the corporate world no longer have access to a traditional company sponsored retirement plan, can cause yet one more stress point on top of those that they encounter running the normal day to day operations of their business. The goal of The Shared Finance Center is to provide business owners with accounting and finance back office support so that they could spend more time working on the business. This being said, I wanted to share with you a comparison of four less known small business retirement plans that the small business owner can choose from to meet their unique needs.
While both Traditional IRAs and Roth IRAs are well known, they have their limitations. Tax deferred contributions are very limited and are phased out as income exceeds certain levels. There is good news for small business owners and entrepreneurs as there are a group of lesser known plans that provide not only the ability to contribute a significant amount every year but also offer a great deal of flexibility as business situations change.
- SEP-IRA: a variation of the Individual Retirement Account. SEP IRAs are adopted by business owners to provide retirement benefits for the business owners and their employees.
- Simple IRA: SIMPLE IRA plan (Savings Incentive Match PLan for Employees) allows employees and employers to contribute to traditional IRAs set up for employees. It is ideally suited as a start-up retirement savings plan for small employers not currently sponsoring a retirement plan.
- Small Plan 401(k): Low-cost, full-service options for 401(k) with assistance for the plan’s administration available for employers with 1 – 1,000 employees.
- Individual 401(k): Also known as a Solo 401(k) or Self Employed 401(k), is a 401(k) qualified retirement plan for Americans that was designed specifically for employers with no full-time employees other than the business owner(s) and their spouse(s)
Although we are not endorsing Vanguard in any way, the following link provides a detailed comparison of the four plans – Link to Vanguard’s comparison.
If we can be of any help please feel free to contact us. Also please share this post with anyone who would benefit from it.
The Shared Finance Center provides outsourced accounting, bookkeeping and fractional CFO support to small business owners and in doing so we heavily focus on maximizing cash flow. We are headquartered in Roswell, Georgia and work with clients across the United States. If you think that this post would be helpful to anyone you know, please pass it along. Also please follow our blog for regular tips to grow your business.