Active Planning & Investment Solutions logo

2810 Fieldstream Drive North

Wilson, NC 27896

 

Phone: 252-237-4357

Fax: 252-243-2681

 

March/April 2021

Retirement Plans for Business Owners

Retirement Plans for Business Owners

Depending on the future sale of your business to finance your retirement can leave you without the resources you'll need to live comfortably. Finding the right retirement plan for your business can make a big difference to you and your employees' financial futures.


Simplified Employee Pension Plans (SEPs)
You can set up a SEP IRA for yourself and each of your employees. Employers generally must contribute the same percentage of pay for each employee, although they do not have to make contributions every year. Employer contributions are limited to the lesser of 25% of pay, or $58,000 ($64,500 if age 50 or older) for 2021. SEPs have low start-up and operating costs. Employers can decide how much to put into a SEP each year, offering some flexibility when business conditions vary.


SIMPLE IRA Plans
This is an option for employers with 100 or fewer employees. Under SIMPLE IRA plans, employees can set aside up to $13,500 in 2021 ($16,500 if age 50 or older). Employers must either match employee contributions dollar for dollar — up to 3% of an employee’s compensation — or make a fixed contribution of 2% of compensation for all eligible employees, even if an employee chooses not to contribute. SIMPLE IRA plans are easy to set up and administrative costs are low.


SIMPLE 401(k) Plans
Similar to SIMPLE IRA plans, Simple 401(k) plans are for small business owners with 100 or fewer employees. Under a SIMPLE 401(k) plan, an employee can elect to defer compensation — up to $13,500 in 2021 ($16,500 if age 50 or older). Employers must match contributions, up to 3% of pay, or make a non-elective contribution of 2% of each eligible employee’s pay. Total contributions to a participant’s account, not counting catch-up contributions, cannot exceed $58,000 for 2021.


Solo 401(k) Plans
This plan covers a business owner with no employees and his or her spouse. Contributions can be made to the plan as both employer and employee. The owner can make elective deferrals of up to 100% of “earned income,” up to the annual contribution limit in 2021 of $19,500 ($26,000 if age 50 or older), plus employer nonelective contributions of up to 25% of compensation as defined by the plan. Your financial professional can help you determine which plan is right for you.


SUBSCRIBE

Enter your Name and Email address to get
the newsletter delivered to your inbox.

Please include name of person that directed you to my online newsletter so I can thank them personally.


CONTACT US

Enter your Name, Email Address and a short message. We'll respond to you as soon as possible.

Active Planning & Investment Solutions and LTM Client Marketing are unrelated companies. This newsletter was created by LTM Client Marketing and was not written or created by the named financial professional and does not necessarily represent the views and opinions of Avantax Wealth Management® or its subsidiaries.
Avantax affiliated advisors may only conduct business with residents of the states for which they are properly licensed and registered. Securities offered through Avantax Investment Services, Member FINRA, SIPC, Investment advisory services offered through Avantax Advisory Services, Insurance services offered through an Avantax affiliated insurance agency. Not all products and services are offered by all financial professionals. Products and services listed may only be offered by properly licensed individuals.

The information and opinions contained in this web site are obtained from sources believed to be reliable, but their accuracy cannot be guaranteed. The publishers assume no responsibility for errors and omissions or for any damages resulting from the use of the published information. This web site is published with the understanding that it does not render legal, accounting, financial, or other professional advice. Whole or partial reproduction of this web site is forbidden without the written permission of the publisher.