Small Business Retirement Plans

(for business owners with employees)

Small business owners with employees can choose from a SIMPLE IRA, SEP IRA, 401k, or a Defined Benefit Plan. Generally, employer sponsored retirement plans fall into 3 categories:

1. Exclusively Employer Funded

SEP-IRA
The employer makes a contribution for any eligible employees according to a percentage between 0 to 25% of compensation. The percentage is the same for employer and eligible employees.

Defined Benefit Plans
The employer makes the contributions according to a specific formula based on actuarial calculations. The maximum retirement income benefit is $195,000 in 2009.

2. Employer and Employee Funded

SIMPLE IRA
Employees can make a voluntary contribution up to $11,500 for the 2009 year or $14,000 if age 50+ and the employer makes a mandatory match according to 2 options.

401k
Employees can make voluntary contributions of up to $16,500 for the 2009 year or $22,000 if age 50+. The employer has the option of making a company match or a profit sharing contribution. An employer match and/or profit sharing contribution is not required.

3. Exclusively Employee Funded

401k
Employees can make voluntary contributions of up to $16,500 for the 2009 year or $22,000 if age 50+. An employer match is not required.

Disclosures:

* The information on this page is for informational purposes only and does not constitute, and should not be construed as, professional, legal or tax advice. To determine your individual tax situation and specific needs, please consult a professional tax advisor.

* Information contained in these sections merely highlight some benefits. There are risks involved with all investments that could include tax penalties and risk/loss of principal.