As a business owner, your employees look to you for more than just a paycheck. For most of them, you are the key to their current and future financial security. And after health insurance, a good retirement plan is what your employees want most. But today you can use these small business retirement plans like 401K, profit sharing plans and defined benefit plans to your advantage for much bigger tax deductions. Thankfully, these options that help you take care of your employees while also taking care of your business and your own retirement.
There are two main categories of retirement plans: those with defined benefits, and those with defined contributions. Defined benefit plans are what most people think about when they hear the word “pension.” These qualified employer-sponsored plans guarantee an employee a defined level of benefits at retirement. By contrast, defined contribution plans provide each participating employee with an individual account, and plan contributions – for both the employer and the employee – are defined. The ultimate retirement benefit is not guaranteed.
Employers also have the ability to choose whether to offer a plan that is “qualified” or a plan that is “non-qualified.” Qualified plans adhere to strict IRC (Internal Revenue Code) and ERISA (Employee Retirement Income Security Act, 1974) guidelines, and offer significant tax advantages to both employers and employees. Most non-qualified plans are not subject to the same IRC and ERISA guidelines, and so offer greater flexibility and reduced cost to employers. In general, non-qualified plans offer fewer tax incentives, and unlike qualified plans, if an employer files for bankruptcy, the assets in a non-qualified plan are unprotected.
Your choices of a retirement plan type are varied – each with its advantages and disadvantages;
Want more detailed information about Small Business Retirement Plans and greater tax deduction? Call retirement specialist at BeamaLife today by dialing (877) 972-3262 or complete this personalized proposal request form now.