5 Best Retirement Plans For Business Owners
As a business owner, you want a retirement plan that will work towards retaining and attracting great employees, and our 5 best retirement plans for business owners will give you some food for thought. Each plan has pros and cons, strengths and weaknesses, so if you want to keep good employees, then you better choose wisely.
- Simplified Employee Pension Plan. Particularly suitable for small business owners, you can make tax-deductible contributions. In addition, setup is easy and so is maintenance of the plan. As a business owner, you may be required to contribute on behalf of employees, too, but that is not in all cases.
- Profit Sharing and Money Purchase Plan. Get this plan if your goal as a business owner is to reward long-term employees with tax-deferred growth and optional loan provisions. This plan is also beneficial because it does not ban companies of different sizes from being eligible, and it lets employers contribute both for themselves as well as for their employees.
- Simple IRA. Suited ideally for companies with 25 or fewer employees, this type of IRA retirement plan permits business owners to contribute to the plans on behalf of themselves as well as their employees at any age. Business owners are further rewarded by being allowed to deduct contributions from federal, taxable income.
- 401(k) Plan. A plan offering flexibility to business owners, these types of plans feature the highest amount of employee, pre-tax contributions, a loan provision, and a liberal range of employer contribution options. The maximum annual contribution permissible for employers is up to 25 percent of compensation, which is not too bad for a retirement plan.
- Individual 401(k). Designed with small business owners with no employees in mind, the contributions allowed under this plan are more than in other plans of the same kind. Proving it deserves a spot on our five best retirement plans for business owners, this plan allows you to choose among thousands of mutual funds.