Retirement Plans for Small Business
(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:
- 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 $175,000
in 2006.
- Employer and Employee Funded
SIMPLE IRA
Employees can make a voluntary contribution up to $10,000 for the 2006 year
or $12,500 if age 50+ and the employer makes a mandatory match according
to 2 options.
401k
Employees can make voluntary contributions of up to $15,000 for the 2006
year or $20,000 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.
- Exclusively Employee Funded
401k
Employees can make voluntary contributions of up to $15,000 for the 2006
year or $20,000 if age 50+. A 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. |
 BCM
welcomes the opportunity for you to speak with a professional about our small business retirement plans
|