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.