{"id":17576,"date":"2015-08-15T15:50:45","date_gmt":"2015-08-15T19:50:45","guid":{"rendered":"https:\/\/www.glensfalls.com\/glensfallsbusinessjournal\/2015\/08\/business-report-business-owner-retirement-strategies.html"},"modified":"2015-08-15T15:50:45","modified_gmt":"2015-08-15T19:50:45","slug":"business-report-business-owner-retirement-strategies","status":"publish","type":"post","link":"https:\/\/www.glensfalls.com\/glensfallsbusinessjournal\/2015\/08\/business-report-business-owner-retirement-strategies\/","title":{"rendered":"Business Report: Business Owner Retirement Strategies"},"content":{"rendered":"
\n
\n\"linda\n<\/div>\n
Linda Conrad is a senior benefits specialist at Marvin and Company PC.\n<\/div>\n<\/div>\n

BY LINDA M. CONRAD<\/p>\n

Saving for retirement isn’t the first
\nthing people think of when starting a new
\nbusiness. Business owners often focus on
\ngrowing their business.<\/p>\n

Sometimes, business growth takes priority
\nover retirement savings. Owners think
\nthey can rely primarily on the business to
\nprovide for their retirement needs. As a
\nresult, some business owners are not saving
\nenough for retirement. As a business owner,
\nyou have the power to make choices when it
\ncomes to saving for your retirement. There
\nare quite a few different retirement options
\navailable that are specifically designed for
\nsmall businesses. This article explores three
\noptions for retirement saving:<\/p>\n

A Simplified Employee Pension (SEP)
\nIRA may be the right option if retirement
\ncontribution goals are more modest or if
\nthere are little or no long term employees.
\nSetting up a SEP involves very little
\npaperwork.
\nSince setting up a SEP is easy, there
\naren’t many administrative costs. Contributions
\nare not mandatory from year to year.
\nAny employee who has earned $550 or more
\nin three of the last five years participates in
\nthe plan. The SEP can only accept contributions
\nby the business. Contribution limits
\nare 25 percent of W-2 wages or 20 percent
\nof self-employment earnings.<\/p>\n

The one rule to keep in mind is that you
\ncan’t contribute a higher percentage to your
\naccount as owner than what is contributed
\nfor your employees. This can become an
\nexpensive option if you add employees and
\nwant to keep your contributions high. You
\ncan set up a SEP IRA for a year as late as
\nthe due date (including extensions) of your
\nbusiness’s income tax return for that year.<\/p>\n

A Savings Incentive Match Plan for
\nEmployees (SIMPLE) IRA is a basic plan
\nfor those employers who want to offer
\n401(k) savings and who have less than 100
\nemployees. Like the SEP, a SIMPLE IRA
\nis easy to set up. Businesses must offer a
\nmatching contribution of up to 3 percent
\nof each qualifying employee’s pay, or a
\nstraight 2 percent regardless of employee
\ncontribution.<\/p>\n

Employees can choose to defer up to
\n$12,500 of their income, and those 50 and
\nover are able to kick in an additional $3,000.
\nEmployees who have earned at least $5,000
\na year with the business in any two years
\nbefore the current calendar year must
\nbe included in the plan. If owners have
\nemployees, this is a nice low-cost option
\nwith the downside of not allowing as much
\npre-tax savings.<\/p>\n

Accounts for a SIMPLE IRA must be
\nopened by Oct. 1, so if you’re looking for a
\nway to cut your tax bill for 2015, there’s still
\ntime with a SIMPLE IRA.<\/p>\n

A SOLO 401(k) for a self-employed individual
\nor the owner of a very small business
\ncan be a great way to boost your retirement
\nsavings. This plan maximizes retirement
\ncontributions by allowing the owner to put
\naside the standard employee contribution
\nof $18,000 a year (up to $23,000 for those 50
\nand over) and the employer can put up to
\nan addition 25 percent with a total annual
\ncontribution limit of $59,000.<\/p>\n

You don’t have to contribute a set amount
\nto a Solo 401(k) each year, so you can
\ncontribute less if you have a tough year or
\nmore if you have a good year. Additionally,
\nemployee contributions can be designated
\nas a Roth 401(k) which will enable participants
\nto have their contributions taxed
\nup-front, with tax free withdrawals in retirement.
\nYou have until December 31 to set up
\na Solo 401(k).<\/p>\n

Unlike the other two options discussed
\nabove, the Solo 401(k) will cost you some
\nmoney to set up and maintain, especially
\nbecause you have to pay administration fees
\nsince the Solo 401(k) is more complicated
\nthan the IRA options. Additionally, you may
\nbe required to report your benefits through
\nform 5500 annually.<\/p>\n

As you can see, there are many retirement
\noptions for small-business owners. Understanding
\nthe differences in the plan types is
\nimportant. If you have been operating a plan
\nthat doesn’t match your business needs,
\nyou could be missing out on important tax
\nbenefits, or possibly making mistakes with
\nrespect to employee contributions.<\/p>\n

To make the most of your retirement savings
\nopportunity – both for yourself and your
\nemployees – make sure it’s the right plan for
\nyour small business before you set one up.<\/p>\n

Conrad is a senior benefits specialist at
\nMarvin and Company PC.<\/p>\n

Photo Courtesy Marvin and Company PC<\/p>\n","protected":false},"excerpt":{"rendered":"

Linda Conrad is a senior benefits specialist at Marvin and Company PC. BY LINDA M. CONRAD Saving for retirement isn’t the first thing people think of when starting a new business. 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