For Entrepreneurs A STRAIGHTFORWARD IRA May Be Best
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Q: I own a small decorating business and Ill be the first to admit which i dont know any thing about fees or retirement plans. Id like to set up a 401(k) or an IRA or various other kind of retirement arrange for me and my three employees. What exactly are the various pension plan options available for a little business proprietor and in your opinion, which works best for me?
A: Wanda, I appreciate your self-confidence in my humble opinion, but asking me for financial advice is similar to asking Donald Trump for a suggestion on hair maintenance systems. I can let you know what works best for me and my business, but youll need to do your research and seek expert advice to determine what would work right for you.
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As a aspect note, I listen to that Donald Trump is developing his own line of hair care product soon to be called Big Head. The formula is 1% mousse, 1% liquid fingernails, and 98% hot air. It ought to be a big seller among the high brow, comb-over group.
The best way to find a good financial consultant is to require recommendations from your most successful friends and associates. Find the richest, stingiest man in town and have who his advisor is. Meet with several advisors, describe your situation, and have for their suggestions. You should also make sure the advisor is a good fit for your personality and your business.
If all will go well you will be doing business with this person for quite some time to come, so make sure the relationship feels comfortable to you and that you will be self-confident in the advisors capability to manage your hard earned money. Let me offer you a quick overview of a few of the retirement plans available to small businesses and that means you at least have a good idea of whats out there before you start your search for a good financial consultant. As a small business you fundamentally have three types of pension programs that you may take benefit of: the Self-Employed 401(k); the Simplified Employee Pension SEP or Plan IRA, and the Savings Incentive Match Plan for SIMPLE or Employees IRA.
Each gives you to make pre-tax efforts to the program, which lets you save for retirement and lessen your taxable income by the amount of the contribution. Your investments also develop tax-deferred until withdrawal. A Self-Employed 401(k) can be an option for self-employed individuals or business owners with no employees apart from a spouse.
The business can be a only proprietorship, a collaboration, or a corporation, including S corps. Next is the Simplified Employee Pension Plan or SEP IRA. A SEP can be an option if you earn a self-employed income from a full or in your free time business, even though you are covered by a retirement plan at your fulltime job. My preferred kind of pension plan is the Cost savings Motivation Match Plan for SIMPLE or Employees IRA. THE EASY IRA was created to make it easier for smaller businesses with 100 or fewer employees to offer a tax-advantaged, company sponsored retirement plan. 10,000) on the pre-tax basis to specific SIMPLE IRAs.
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