A retirement plan that fits your business

If you have yet to develop a retirement plan for your business, or if you’re not sure the plan you’ve chosen is the right one, here are some things to consider. HOW MUCH

CAN MY BUSINESS AFFORD TO CONTRIBUTE? >> The cost of contributions may be managed by the plan type.

A simplified employee pension plan (SEP) is funded by employer contributions only. SEP contributions are made to separate IRAs for eligible employees.

Savings Incentive Match Plan for Employees of Small Employers (SIMPLE) IRAs blend employee and employer contributions. For example, some employers match employee contributions up to 100% of the first 3% of compensation. Others may contribute 2% of each eligible employee’s compensation. It’s up to the employer to decide the formula based on what works best for the business.

A 401(k) is primarily funded by the employee; the employer can choose

to make additional contributions, including matching contributions.

WHAT PLAN ACCOMMODATES

HIGH EMPLOYEE TURNOVER? >> The cost of covering short-tenured employees may be managed by eligibility requirements and vesting.

With the SEP-IRA, only employees who are at least 21 years old, earn at least $650 in compensation, and have been employed in three of the last five years must be covered.

The SIMPLE IRA must cover employees who have earned at least $5,000 in any prior two years and are reasonably expected to earn $5,000 in the current year. 5

The 401(k) and defined benefit plan must cover all employees who are at least 21 years of age. These retirement plans are open for employees who have either worked 1,000 hours in the space of one full year or to those who have worked at least 500 hours per year for three consecutive years.

Vesting is immediate on all contributions to the SEP-IRA, SIMPLE IRA and 401( k) employee deferrals, while a vesting schedule may apply to 401( k) employer contributions and defined benefits.

DO I WANT TO MAXIMIZE

CONTRIBUTIONS FOR MY

SELF (AND MY SPOUSE)? >> The SEP-IRA and 401(k) offer higher contribution maximums than the SIMPLE IRA. For those business owners who are starting late, a defined benefit plan may offer even higher levels of allowable contributions.

MY PRIORITY IS TO KEEP AD

MINISTRATION EASY AND

INEXPENSIVE. >> The SEPIRA and SIMPLE IRA are straightforward to establish and maintain. The 401(k) can be more onerous, but complicated testing may be eliminated by using a Safe Harbor 401( k). Generally, the defined benefit plan is the most complicated and expensive to establish and maintain of all plan choices.

Richard H Mootz, CFP® CERTIFIED FINANCIAL PLANNER™ professional, is a Registered Representative of and offers securities through Securities America, Inc., a Registered Broker/ Dealer, member FINRA/ SIPC., Advisory Services offered through Securities America Advisors,

Inc., A SEC Registered Investment Advisory firm. Mootz Financial Solutions and Securities America Companies are not affiliated. Mootz can be reached at (530) 8777007 by e-mail rick@ mootzfinancial.com or visit the website at www. mootzfinancialsolutions. com. Securities America and its advisors do not provide tax or legal advice. Please consult with your tax or legal professional regarding your individual situation. The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG Suite is not affiliated with the named brokerdealer, state- or SECregistered investment advisory firm. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Copyright FMG Suite.