Did you know that only about half of small business owners with 99 or fewer employees offer a retirement plan?1 If you don’t already have one, you’re passing up a terrific opportunity to enhance the financial security of your later years while providing an attractive employee benefit.
If you currently have a plan, you are aware of the advantages a retirement plan offers. However, is the plan you have in place the best option for your business? Evaluating your retirement plan options could result in great advantages that may make a real difference today, and well into the future.
What’s in it for You?
The impact of saving on a tax-deferred basis has the potential to give employees’ accounts a dramatic boost relative to a comparable investment in a non-tax-favored savings vehicle. Assuming a 6% rate of return and a 20-year savings period, you can see that an individual putting away just $100 a month through a retirement plan has quite an advantage, regardless of his or her tax bracket.
2. This hypothetical example is not intended to show the performance of any Oppenheimer fund for any period of time, nor does it show fluctuations in principal value or investment return.
3. Assumes a fixed average annual rate of return of 6%, on a tax-deferred basis, with dividends and distributions reinvested. Withdrawals from qualified plans prior to age 59½ may be subject to taxes and penalties. The hypothetical ending values are subject to income tax when withdrawn.
Periodic investment plans do not assure a profit or protect against losses in declining markets.
What’s in it for Your Business?
A retirement plan can give your business a tax break since employer contributions to a plan are tax-deductible up to 25% of compensation for incorporated businesses. Second, putting a retirement plan in place can be a surprisingly inexpensive and simple way to add a major incentive to your employee benefits package. Third, there are a variety of retirement plans programs tailored specifically to meet the needs and demands of the small business owner. Retirement plans vary from a one person to multiple employee plans. Depending on the plan you choose, you can determine how the plan is funded, who is eligible to participate, when employees are vested, and even how much time you want to spend administering the program.
Access to a retirement plan can even help improve employee recruitment and retention. While compensation may be the biggest draw, it’s not the only one. With retirement issues currently center stage, most employees understand the importance of retirement readiness too. Ensure your business is attracting the best talent by offering an employer-sponsored retirement program.
Call your financial advisor today to explore if a profit-sharing plan is right for you. To learn more access Retirement Plans for Small Businesses Employer Guide.
1 Source: LIMRA, Jan. 28, 2014↩