Michael Costle, Financial Advisor CRPC

2246 Boot Hill Court, Suite 6A
Bozeman, MT 59715

406-586-3214

Retirement

Exploring Retirement Plans for Small Businesses

This infographic is composed of six images with accompanying text. The images are stacked vertically with the text across each image. A design treatment has been placed along the background of wavy lines. The first image has a header reading Exploring Retirement Options for Small Businesses. The text underneath reads, Selecting a retirement account for your small business is a key decision that impacts both you and your employees. With various choices available, it’s important to consider factors such as expenses, employee turnover, and contributions. This brief guide is designed to help you navigate different considerations when choosing a retirement plan that aligns with your business. A financial professional can provide guidance as you review the pros and cons of the different choices.This infographic is composed of six images with accompanying text. The images are stacked vertically with the text across each image. A design treatment has been placed along the background of wavy lines. The first image has a header reading Exploring Retirement Options for Small Businesses. The text underneath reads, Selecting a retirement account for your small business is a key decision that impacts both you and your employees. With various choices available, it’s important to consider factors such as expenses, employee turnover, and contributions. This brief guide is designed to help you navigate different considerations when choosing a retirement plan that aligns with your business. A financial professional can provide guidance as you review the pros and cons of the different choices.Moving down the infographic, the header reads Choice 1: Consider Your Retirement Account Options. The text underneath reads the following: Simplified Employee Pension Plan (SEP): This is an employer-funded retirement account where contributions are made to separate IRAs for eligible employees. Savings Incentive Match Plan for Employees of Small Employers (SIMPLE) IRA: This plan blends employee and employer contributions. Employers may match employee contributions or contribute a fixed percentage of each eligible employee’s compensation. 401(k): This account is primarily funded by the employee, with the choice of additional employer contributions, including matching contributions.Moving down the infographic, the header reads Choice 1: Consider Your Retirement Account Options. The text underneath reads the following: Simplified Employee Pension Plan (SEP): This is an employer-funded retirement account where contributions are made to separate IRAs for eligible employees. Savings Incentive Match Plan for Employees of Small Employers (SIMPLE) IRA: This plan blends employee and employer contributions. Employers may match employee contributions or contribute a fixed percentage of each eligible employee’s compensation. 401(k): This account is primarily funded by the employee, with the choice of additional employer contributions, including matching contributions.Continuing down the infographic, you reach Choice 2: Help Manage High Turnover. The text underneath reads, SEP-IRA: This plan covers employees at least 21 years old who earn at least 650 dollars in compensation and have been employed in three of the last five years. SIMPLE IRA: This plan covers employees who have earned at least 5,000 dollars in any prior two years and are reasonably expected to earn 5,000 dollars in the current year. 401(k) and Defined Benefit Plan: This plan covers all employees who are at least 21 years old and is based on specific hours worked criteria.Continuing down the infographic, you reach Choice 2: Help Manage High Turnover. The text underneath reads, SEP-IRA: This plan covers employees at least 21 years old who earn at least 650 dollars in compensation and have been employed in three of the last five years. SIMPLE IRA: This plan covers employees who have earned at least 5,000 dollars in any prior two years and are reasonably expected to earn 5,000 dollars in the current year. 401(k) and Defined Benefit Plan: This plan covers all employees who are at least 21 years old and is based on specific hours worked criteria.The next section reads, Choice 3: Maximize Contributions for Yourself & Your Spouse. The text underneath reads, SEP-IRA and 401(k): These plans offer higher contribution maximums than the SIMPLE IRA. Defined Benefit Plan: This plan is suitable for business owners starting late, and it provides even higher allowable contributions.The next section reads, Choice 3: Maximize Contributions for Yourself & Your Spouse. The text underneath reads, SEP-IRA and 401(k): These plans offer higher contribution maximums than the SIMPLE IRA. Defined Benefit Plan: This plan is suitable for business owners starting late, and it provides even higher allowable contributions.The next header reads, Choice 4: Prioritize Ease of Set-up While Managing Administration Fees. The options underneath read as follows: SEP-IRA and SIMPLE IRA: Straightforward to establish and maintain. 401(k): This can be more complex, but using Safe Harbor 401(k) can simplify testing requirements. Defined Benefit Plan: This is the most complicated and expensive retirement option to establish and maintain.The next header reads, Choice 4: Prioritize Ease of Set-up While Managing Administration Fees. The options underneath read as follows: SEP-IRA and SIMPLE IRA: Straightforward to establish and maintain. 401(k): This can be more complex, but using Safe Harbor 401(k) can simplify testing requirements. Defined Benefit Plan: This is the most complicated and expensive retirement option to establish and maintain.The last section of the infographic reads as follows: A financial professional may be able to help. They can either provide some general guidance regarding what retirement strategy best fits your business, or they can access research material that will help you better understand the available choices. Like a traditional IRA, withdrawals from a SEP-IRA and SIMPLE IRAs are taxed as ordinary income and, if taken before age 59 and a half, may be subject to a 10% federal income tax penalty. In most circumstances, once you reach age 73, you must begin taking the required minimum distributions. In most circumstances, you must begin taking required minimum distributions from your 401(k) or other defined contribution plans in the year you turn 73. Withdrawals from your 401(k) or other defined contribution plans are taxed as ordinary income, and if taken before age 59 and a half, may be subject to a 10% federal income tax penalty.The last section of the infographic reads as follows: A financial professional may be able to help. They can either provide some general guidance regarding what retirement strategy best fits your business, or they can access research material that will help you better understand the available choices. Like a traditional IRA, withdrawals from a SEP-IRA and SIMPLE IRAs are taxed as ordinary income and, if taken before age 59 and a half, may be subject to a 10% federal income tax penalty. In most circumstances, once you reach age 73, you must begin taking the required minimum distributions. In most circumstances, you must begin taking required minimum distributions from your 401(k) or other defined contribution plans in the year you turn 73. Withdrawals from your 401(k) or other defined contribution plans are taxed as ordinary income, and if taken before age 59 and a half, may be subject to a 10% federal income tax penalty.

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