As 2023 is in full throttle, it’s time to start thinking about your new year's business resolutions. Whether you’ve started prepping for this year’s goals or not, it’s time to consider how to enhance your business functions. As a small business owner, you may want to start by providing your employees with a retirement savings plan. This can be intimidating, and you might not know where to start. However, we’ve provided you with a variety of different ways in which you can offer your employees a retirement plan to set them up for success.
Let’s Start With The Basics
An individual retirement account (IRA) is a long-term savings account that individuals with earned income can utilize to save for the future while enjoying certain tax advantages. Money held in an IRA typically cannot be withdrawn before the age of 59 ½ without incurring a significant tax penalty of 10% of the amount withdrawn. In addition, there are a variety of IRAs individuals can utilize, including:
- Traditional IRAs
- Roth IRAs
- Simplified Employee Pension (SEP) IRAs
For a deeper dive into these various retirement plan options, click here.
Is The Safe Harbor 401(k) The Right Fit For Your Business?
When it comes to retirement plans, not all are inexpensive to establish, nor are they easy to maintain. Recently, businesses have begun implementing a Safe Harbor 401(k). A Safe Harbor Plan 401(k) is similar to a traditional 401(k) plan; however, it must provide for employer contributions that are fully vested when made. These contributions may be employer-matching contributions that are limited to employees who accept, or employer contributions made on behalf of all eligible employees, regardless of whether they make elective deferrals. You can forgo annual nondiscrimination testing in exchange for required contributions, which ultimately helps reduce your duties as the plan administrator.
While a Safe Harbor plan offers many benefits, it makes it easier to save for your own retirement while also helping your employees become ready for their retirement. Business owners may contribute up to $20,500 tax deferred, lowering their personal tax liability. On top of that, the employer-matching contribution you provide for your employees is a tax deduction.
Partner With GMS
Offering a retirement plan to your employees is essential to recruiting and retaining quality employees, but it’s a benefit with a lot of complexity and risk. Yes, all of these plans sound great, but do you really want to take the time out of your already busy schedule to implement this? Fortunately, when you partner with GMS, we’ve made it easy for you to give your employees what they want and need, all while doing what you do best – growing your business. Our partnership provides you access to our small business 401(k) plan administration services. You can also offer your employees a profit-sharing 401(k) plan!
By implementing a profit-sharing plan, you can show employees they are critical to your company’s success by rewarding them for their hard work. Partnering with a PEO like GMS helps you with the following:
- Cut costs and reduce stress
- Save time
- Offer benefits your employees want the most
To learn more, contact us today.