SMALL BUSINESS RETIREMENT PLANS FOR EMPLOYEES

2007-03-08 10:33:40

( Insurance )



A good employee retirement plan is an attractive fringe benefit to attract and retain potential employees. Employees usually last longer working for small businesses that offers an attractive retirement benefit package for its employees.

Various financial companies offer options for small business retirement plans. They can design business retirement plans specific to the needs of small businesses and their respective employees.

Retirement Package for Businesses with Few Employees

Small businesses with few employees have the option to choose a simplified employee pension plan with tax deductible employer contribution. It is a low cost and a low maintenance small business retirement plans. All eligible employees are required to be covered. However, it does not accept contributions from employees.

Filing of annual reports with the Internal Revenue Service is not needed in maintaining a simplified employee pension plan. However, contributions vary from year to year.

Business Retirement Plans with Employee Contributions

Small businesses with less than ten employees can choose a savings incentive match plan for its employees' retirement plan. Employees contribute to this plan with a matching counterpart from employers. This type of plan is actually available for small businesses with less than one hundred employees and do not maintain any other retirement plan.

Profit Sharing Small Business Retirement Plans

Business owners or self employed individuals who hire employees for their projects can choose profit sharing retirement plans. Employers determine the amount of profits that will be shared with their employees based on the reported earnings of their business operations. Employees, on the other hand, cannot make their own contributions to the plan.

Contributions under profit sharing plans vary every year since the amount will depend on the profits reported by the business every year. However, administration of the plan requires the services of a consultant to determine the amount of profits to be shared with employees.

Small business retirement plans are effective way to boost business operations. It helps retain good employees who will ensure quality of production and efficient service for the business. It also helps lower administration cost related to training new employees.


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