{"id":32927,"date":"2020-02-14T09:17:20","date_gmt":"2020-02-14T14:17:20","guid":{"rendered":"https:\/\/www.glensfalls.com\/glensfallsbusinessjournal\/?p=32927"},"modified":"2020-02-14T13:43:17","modified_gmt":"2020-02-14T18:43:17","slug":"providing-retirement-options-for-employees-leaves-business-owners-with-many-options","status":"publish","type":"post","link":"https:\/\/www.glensfalls.com\/glensfallsbusinessjournal\/2020\/02\/providing-retirement-options-for-employees-leaves-business-owners-with-many-options\/","title":{"rendered":"Providing Retirement Options For Employees Leaves Business Owners With Many Options"},"content":{"rendered":"
\"\"
Richard J. Fuller is a CPA with offices in Glens Falls.
Courtesy Richard J. Fuller, CPA<\/figcaption><\/figure>\n

By Susan E. Campbell
\nSmall business owners have the flexibility to choose whichever type of retirement plan they desire to accumulate a future nest egg on a tax-deferred basis. But that doesn\u2019t mean the decision is easy, or that the company may need to change to a different plan in years ahead.
\n\u201cEach of the four basic types of defined contribution plans has advantages and drawbacks,\u201d said Laurie A. Stillwell, CPA, in Saratoga Springs.
\n\u201cMy job is to talk through what the business owners\u2019 goals are and direct them to the plan that checks those boxes,\u201d she said.
\n\u201cCompanies are not stuck in a plan once they have it,\u201d said Richard J. Fuller, CPA in Glens Falls. \u201cBut if there is to be a switch, it has to be done right.\u201d
\n\u201cThere is no one-size-fits-all with retirement plans,\u201d said Stillwell. \u201cA plan may work well for the first five years, but in year 10 or 15, it may no longer fit.\u201d
\nSmall business advisors like Stillwell and Fuller keep a constant eye on the qualified retirement savings process before, during and after the client company\u2019s initial set-up.
\n\u201cThe first thing I want to know is, how much money does my client have available to put away for their future,\u201d said Fuller. \u201cAnd the next question is, how much do they want to put aside for employees.\u201d
\nThe cost of the plan includes not only the total dollar amount of employer-made contributions to the plan, but also the timing of those payments, according to Fuller.
\n\u201cThe timing of when contributions have to be made impacts cash flow,\u201d he said. \u201cPlus, there is a cost in terms of both time and money to administer any retirement plan.\u201d
\n\u201cContributions can be tricky,\u201d said Stillwell. \u201cDo you want discretion every year? What if the plan requires you to make a contribution?\u201d
\nQuestions like these \u201care all part of crafting the conversation,\u201d she said.
\nStillwell said many small businesses are becoming \u201cmore aggressive about saving\u201d and want to \u201csock away more money for themselves. For that goal, they might choose to establish a 401(k) profit sharing plan.\u201d
\nA 401(k) plan allows for the highest maximum contribution levels when employee salary deferrals and employer contributions are combined, said the experts.
\n\u201cThey\u2019re the most complicated, and complex options mean higher administrative costs,\u201d said Fuller. \u201cBut the more money you can put away, the easier it is to justify the higher expenses.\u201d
\n\u201cThere is an annual Form 5500 filing with IRS that could cost hundreds or even thousands of dollar to prepare,\u201d he said. \u201cTesting procedures ensure that the plan cannot unjustly favor business owners and other highly compensated employees.\u201d
\nThere is also a solo 401(k) for self-employed individuals, where administrative costs are lower than the typical 401(k) plan.
\n\u201cThis plan is used by sole proprietors or business owners who won\u2019t be hiring employees,\u201d Fuller said. \u201cEstablishing a SEP IRA, or Simplified Employee Pension Plan, is different. It is totally for employer contributions, which, like employer contributions to any plan, are tax deductible as a business expense.\u201d
\nThere is no eligibility testing, 5500 filing, plan set-up charge or annual maintenance fee for SEP Plans, Fuller said.\u00a0Plus, business owners can decide how much to contribute on behalf of employees each year, up to the maximum allowed by law. That means they aren\u2019t locked into making a contribution if profits are down in a bad year.
\nFuller said if the employer is limited to a $5,500 contribution per employee, \u201cthere is no need to get complicated. Just do a traditional IRA.\u201d
\nBut if there is more cash available and fewer than 100 employees, the SIMPLE IRA is a good choice, according to the experts.
\nThe Savings Incentive Match for Employees IRA, as the name suggests, is a type of employer-provided IRA where employees are motivated to participate because the company also contributes. But the top percentage employers may contribute is only 3 percent, compared to 25 percent for a 401(k) plan.
\nFuller said that if a company offers a SIMPLE IRA, participants cannot have any other profit sharing or SEP Plan at the same time.
\n\u201cBusiness owners have to evaluate what they have and decide, is this the best plan going forward or is it time for a change?\u201d he said. \u201cIf you are not sure, however, you shouldn\u2019t be changing your plan year to year. You need to make a clean break that minimizes administrative requirements and expenses.\u201d
\nThere can be changes within plans and between plans, said the advisors, that impact such decisions. Congress has been generous in making new and different retirement plan options available to a growing number of market segments. Plus, new legislation ups the amount of annual contributions from time to time to help keep pace with inflation.
\nStillwell said to help defray the cost to set up a plan, small businesses have gotten a three-year, $500 tax credit for establishing a new plan. That credit has been increased.
\n\u201cThe company must have fewer than 100 employees and at least one non-highly-compensated individual participating in the plan,\u201d she said. \u201cThe credit is for automatic enrollment plans that are new or converted from other plans.\u201d
\nIndeed, the U.S. government would like to see more people taking advantage of a retirement savings plan in any form. One-third of Americans surveyed by Bankrate.com said they had never had a retirement account.
\n\u201cThe increased credit is part of the SECURE Act passed in December 2019, and we will see some rank-and-file employee participation,\u201d said Stillwell.
\n\u201cCongress loves their acronyms,\u201d she said. The \u2018Setting Every Community Up For Retirement Enhancement\u2019 Act has a number of provisions that Stillwell said will benefit individuals, including certain long-term, part-time employees, more so than employers.
\nBut while Congress gives, it also takes away.
\n\u201cThe legislative biggie now has to do with inherited IRAs,\u201d said Fuller. \u201cUntil now, beneficiaries of inherited IRAs could elect to take distributions based on their own life expectancy. That has been changed to within 10 years, unless the beneficiary is the deceased\u2019s spouse.\u201d
\nThat puts tax dollars into federal coffers faster, he said.<\/p>\n","protected":false},"excerpt":{"rendered":"

By Susan E. Campbell Small business owners have the flexibility to choose whichever type of retirement plan they desire to accumulate a future nest egg on a tax-deferred basis. But that doesn\u2019t mean the decision is easy, or that the company may need to change to a different plan in years ahead. \u201cEach of the […]<\/p>\n","protected":false},"author":196,"featured_media":32928,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[40],"tags":[],"yoast_head":"\r\nProviding Retirement Options For Employees Leaves Business Owners With Many Options - Glens Falls Business Journal<\/title>\r\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\r\n<link rel=\"canonical\" href=\"https:\/\/www.glensfalls.com\/glensfallsbusinessjournal\/2020\/02\/providing-retirement-options-for-employees-leaves-business-owners-with-many-options\/\" \/>\r\n<meta property=\"og:locale\" content=\"en_US\" \/>\r\n<meta property=\"og:type\" content=\"article\" \/>\r\n<meta property=\"og:title\" content=\"Providing Retirement Options For Employees Leaves Business Owners With Many Options - Glens Falls Business Journal\" \/>\r\n<meta property=\"og:description\" content=\"By Susan E. Campbell Small business owners have the flexibility to choose whichever type of retirement plan they desire to accumulate a future nest egg on a tax-deferred basis. But that doesn\u2019t mean the decision is easy, or that the company may need to change to a different plan in years ahead. \u201cEach of the […]\" \/>\r\n<meta property=\"og:url\" content=\"https:\/\/www.glensfalls.com\/glensfallsbusinessjournal\/2020\/02\/providing-retirement-options-for-employees-leaves-business-owners-with-many-options\/\" \/>\r\n<meta property=\"og:site_name\" content=\"Glens Falls Business Journal\" \/>\r\n<meta property=\"article:published_time\" content=\"2020-02-14T14:17:20+00:00\" \/>\r\n<meta property=\"article:modified_time\" content=\"2020-02-14T18:43:17+00:00\" \/>\r\n<meta property=\"og:image\" content=\"https:\/\/www.glensfalls.com\/glensfallsbusinessjournal\/wp-content\/uploads\/sites\/109\/2020\/02\/employee-retirement-options-fuller-c-1.jpg\" \/>\r\n\t<meta property=\"og:image:width\" content=\"448\" \/>\r\n\t<meta property=\"og:image:height\" content=\"666\" \/>\r\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\r\n<meta name=\"author\" content=\"jessewinters\" \/>\r\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\r\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"jessewinters\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"5 minutes\" \/>\r\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.glensfalls.com\/glensfallsbusinessjournal\/2020\/02\/providing-retirement-options-for-employees-leaves-business-owners-with-many-options\/\",\"url\":\"https:\/\/www.glensfalls.com\/glensfallsbusinessjournal\/2020\/02\/providing-retirement-options-for-employees-leaves-business-owners-with-many-options\/\",\"name\":\"Providing Retirement Options For Employees Leaves Business Owners With Many Options - Glens Falls Business Journal\",\"isPartOf\":{\"@id\":\"https:\/\/www.glensfalls.com\/glensfallsbusinessjournal\/#website\"},\"datePublished\":\"2020-02-14T14:17:20+00:00\",\"dateModified\":\"2020-02-14T18:43:17+00:00\",\"author\":{\"@id\":\"https:\/\/www.glensfalls.com\/glensfallsbusinessjournal\/#\/schema\/person\/b937a48daf87d7a8bd713a73b5d6a1ae\"},\"breadcrumb\":{\"@id\":\"https:\/\/www.glensfalls.com\/glensfallsbusinessjournal\/2020\/02\/providing-retirement-options-for-employees-leaves-business-owners-with-many-options\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/www.glensfalls.com\/glensfallsbusinessjournal\/2020\/02\/providing-retirement-options-for-employees-leaves-business-owners-with-many-options\/\"]}]},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\/\/www.glensfalls.com\/glensfallsbusinessjournal\/2020\/02\/providing-retirement-options-for-employees-leaves-business-owners-with-many-options\/#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\/\/www.glensfalls.com\/glensfallsbusinessjournal\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"Providing Retirement Options For Employees Leaves Business Owners With Many Options\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\/\/www.glensfalls.com\/glensfallsbusinessjournal\/#website\",\"url\":\"https:\/\/www.glensfalls.com\/glensfallsbusinessjournal\/\",\"name\":\"Glens Falls Business Journal\",\"description\":\"\",\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\/\/www.glensfalls.com\/glensfallsbusinessjournal\/?s={search_term_string}\"},\"query-input\":\"required name=search_term_string\"}],\"inLanguage\":\"en-US\"},{\"@type\":\"Person\",\"@id\":\"https:\/\/www.glensfalls.com\/glensfallsbusinessjournal\/#\/schema\/person\/b937a48daf87d7a8bd713a73b5d6a1ae\",\"name\":\"jessewinters\",\"image\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/www.glensfalls.com\/glensfallsbusinessjournal\/#\/schema\/person\/image\/\",\"url\":\"https:\/\/secure.gravatar.com\/avatar\/b496e0843f9d888b12500994b6a8562b?s=96&d=mm&r=g\",\"contentUrl\":\"https:\/\/secure.gravatar.com\/avatar\/b496e0843f9d888b12500994b6a8562b?s=96&d=mm&r=g\",\"caption\":\"jessewinters\"},\"url\":\"https:\/\/www.glensfalls.com\/glensfallsbusinessjournal\/author\/jessewinters\/\"}]}<\/script>\r\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"Providing Retirement Options For Employees Leaves Business Owners With Many Options - Glens Falls Business Journal","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/www.glensfalls.com\/glensfallsbusinessjournal\/2020\/02\/providing-retirement-options-for-employees-leaves-business-owners-with-many-options\/","og_locale":"en_US","og_type":"article","og_title":"Providing Retirement Options For Employees Leaves Business Owners With Many Options - Glens Falls Business Journal","og_description":"By Susan E. Campbell Small business owners have the flexibility to choose whichever type of retirement plan they desire to accumulate a future nest egg on a tax-deferred basis. But that doesn\u2019t mean the decision is easy, or that the company may need to change to a different plan in years ahead. \u201cEach of the […]","og_url":"https:\/\/www.glensfalls.com\/glensfallsbusinessjournal\/2020\/02\/providing-retirement-options-for-employees-leaves-business-owners-with-many-options\/","og_site_name":"Glens Falls Business Journal","article_published_time":"2020-02-14T14:17:20+00:00","article_modified_time":"2020-02-14T18:43:17+00:00","og_image":[{"width":448,"height":666,"url":"https:\/\/www.glensfalls.com\/glensfallsbusinessjournal\/wp-content\/uploads\/sites\/109\/2020\/02\/employee-retirement-options-fuller-c-1.jpg","type":"image\/jpeg"}],"author":"jessewinters","twitter_card":"summary_large_image","twitter_misc":{"Written by":"jessewinters","Est. reading time":"5 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"WebPage","@id":"https:\/\/www.glensfalls.com\/glensfallsbusinessjournal\/2020\/02\/providing-retirement-options-for-employees-leaves-business-owners-with-many-options\/","url":"https:\/\/www.glensfalls.com\/glensfallsbusinessjournal\/2020\/02\/providing-retirement-options-for-employees-leaves-business-owners-with-many-options\/","name":"Providing Retirement Options For Employees Leaves Business Owners With Many Options - Glens Falls Business Journal","isPartOf":{"@id":"https:\/\/www.glensfalls.com\/glensfallsbusinessjournal\/#website"},"datePublished":"2020-02-14T14:17:20+00:00","dateModified":"2020-02-14T18:43:17+00:00","author":{"@id":"https:\/\/www.glensfalls.com\/glensfallsbusinessjournal\/#\/schema\/person\/b937a48daf87d7a8bd713a73b5d6a1ae"},"breadcrumb":{"@id":"https:\/\/www.glensfalls.com\/glensfallsbusinessjournal\/2020\/02\/providing-retirement-options-for-employees-leaves-business-owners-with-many-options\/#breadcrumb"},"inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/www.glensfalls.com\/glensfallsbusinessjournal\/2020\/02\/providing-retirement-options-for-employees-leaves-business-owners-with-many-options\/"]}]},{"@type":"BreadcrumbList","@id":"https:\/\/www.glensfalls.com\/glensfallsbusinessjournal\/2020\/02\/providing-retirement-options-for-employees-leaves-business-owners-with-many-options\/#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/www.glensfalls.com\/glensfallsbusinessjournal\/"},{"@type":"ListItem","position":2,"name":"Providing Retirement Options For Employees Leaves Business Owners With Many Options"}]},{"@type":"WebSite","@id":"https:\/\/www.glensfalls.com\/glensfallsbusinessjournal\/#website","url":"https:\/\/www.glensfalls.com\/glensfallsbusinessjournal\/","name":"Glens Falls Business Journal","description":"","potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/www.glensfalls.com\/glensfallsbusinessjournal\/?s={search_term_string}"},"query-input":"required name=search_term_string"}],"inLanguage":"en-US"},{"@type":"Person","@id":"https:\/\/www.glensfalls.com\/glensfallsbusinessjournal\/#\/schema\/person\/b937a48daf87d7a8bd713a73b5d6a1ae","name":"jessewinters","image":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/www.glensfalls.com\/glensfallsbusinessjournal\/#\/schema\/person\/image\/","url":"https:\/\/secure.gravatar.com\/avatar\/b496e0843f9d888b12500994b6a8562b?s=96&d=mm&r=g","contentUrl":"https:\/\/secure.gravatar.com\/avatar\/b496e0843f9d888b12500994b6a8562b?s=96&d=mm&r=g","caption":"jessewinters"},"url":"https:\/\/www.glensfalls.com\/glensfallsbusinessjournal\/author\/jessewinters\/"}]}},"_links":{"self":[{"href":"https:\/\/www.glensfalls.com\/glensfallsbusinessjournal\/wp-json\/wp\/v2\/posts\/32927"}],"collection":[{"href":"https:\/\/www.glensfalls.com\/glensfallsbusinessjournal\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.glensfalls.com\/glensfallsbusinessjournal\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.glensfalls.com\/glensfallsbusinessjournal\/wp-json\/wp\/v2\/users\/196"}],"replies":[{"embeddable":true,"href":"https:\/\/www.glensfalls.com\/glensfallsbusinessjournal\/wp-json\/wp\/v2\/comments?post=32927"}],"version-history":[{"count":1,"href":"https:\/\/www.glensfalls.com\/glensfallsbusinessjournal\/wp-json\/wp\/v2\/posts\/32927\/revisions"}],"predecessor-version":[{"id":32929,"href":"https:\/\/www.glensfalls.com\/glensfallsbusinessjournal\/wp-json\/wp\/v2\/posts\/32927\/revisions\/32929"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.glensfalls.com\/glensfallsbusinessjournal\/wp-json\/wp\/v2\/media\/32928"}],"wp:attachment":[{"href":"https:\/\/www.glensfalls.com\/glensfallsbusinessjournal\/wp-json\/wp\/v2\/media?parent=32927"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.glensfalls.com\/glensfallsbusinessjournal\/wp-json\/wp\/v2\/categories?post=32927"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.glensfalls.com\/glensfallsbusinessjournal\/wp-json\/wp\/v2\/tags?post=32927"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}