May 28, 2022

Retirement Plans That Can Minimize Complexity for Your Business

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Offering a retirement plan for your employees is great for employee satisfaction, but the plans can be complex. Make sure you go with the plan that works best for you and your company. Below you’ll find a few of the most simple retirement plans you can offer. 

A SEP-IRA

An SEP-IRA plan is also known as a Simplified Employee Pension plan. This plan allows an IRA to be established for every employee within the company, and gives you the freedom to decide how much to contribute every year. This option is incredibly simple for you as a business owner. There is little upkeep and the start up costs are low enough that it’s a great option for a small business. There is also a high limit with how much you can contribute to the plan every year. The maximum contribution for SEP-IRA accounts this year is 25% of your employees’ salary. This is the most popular option for businesses with only a few employees.

A Safe Harbor 401k

A safe harbor 401k plan is another great retirement plan option for businesses. This option is common because it allows you to offer a fixed contribution rate to your employees with little hassle. A safe harbor plan can ensure the plan passes non-discrimination tests. With this option, you’ll be able to set a specific percentage amount that you will match your employee’s contributions. For example, the most basic option for a safe harbor 401k plan allows you to match 100% of the first 3% of your employee’s elected deferral. Other options are available based on your business needs. This is a great option if you want your focus to be on motivating employees to save for retirement.

SIMPLE IRA

SIMPLE IRA stands for Savings Incentive Match Plan for Employees. This plan allows both you as the employer and your employees to contribute to the retirement plan. This plan can be helpful because it doesn’t require the same startup costs or operating costs as other plan options. In order to qualify for this plan option, your business needs to have 100 or fewer employees. With this option, your employees are also vested from the beginning. Do some research into this plan and see if it would work best for your business.

Offering a retirement plan to your employees is a great way to keep employees long-term, and attract new employees. This shows your employees that you value them and their futures. However, do some research into different plan options to see which is the best option for you and your business.

Check out this article on boring but critical parts of running a business!

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