Monday, May 10, 2010

Different Types Of Employer Retirement Plans For SMEs

There are many employee retirement plans available, The following plans are suited to small and medium businesses because they are low cost and easy to administer and setup. Ask tax professional to make sure the plan which is chosen by you is suitable for your business.

Payroll deduction IRA: The business can offer this because it is simplest retirement arrangement. To devote to plan administration, it is suitable to small business with limited resources. In this plan pre-tax salary deductions are transformed by an employer to Roth individual retirement accounts which are established and manage by employees and traditional accounts.

Pros: There is no administrative cost and paper work. Employer has small responsibility other than to transfer funds. Employee contributions are tax held up up to $4000 in 2007, for employees 50 and older with additional $1,000 catch up contributions.

Cons: Employers do not have tax breaks. Payroll deductions may be considered by employees as a perk, not as a benefit, as employers are only passing the money and do not contribute.

SEP IRA: This is Simplified Employee pension IRA, this suits to self-employed, small businesses, and this offer retirement savings plans to your employees they are tax-deductible for businesses. Employees manage accounts under a SEP IRA, but SEP plan must be established by employers for their business.


Related links:
Workers compensation software

No comments: