Pension Plans For Small Business

Pension Plans For Small Business-52
If your business has employees, a SEP, Solo 401(k) or Keogh generally must cover them as well--meaning you'll probably have to make contributions that don't just benefit yourself.All employee SEP contributions are immediately 100 percent vested.One more thing: You can contribute an additional 0 if you will be 50 or older at year-end.

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However, the percentage can be varied each year, so lower amounts (or nothing at all) can be contributed when you turn out to be starved for cash. SEPs are great for procrastinators because they can be opened up as late as the extended due date of your income tax return.

Finally, SEPs are much simpler to establish and administer than Keogh profit-sharing and pension plans.

The same relatively generous thresholds apply even if you have a SEP, 401(k)or Keogh plan (and even if your spouse is covered by a retirement plan through work of self-employment).

So you can contribute the max to your SEP, 401(k) or Keogh and then pop an additional $4,000 (or $8,000) into a Roth IRA to boot.

The existence of employees means you should consult a good employee benefits pro before initiating any type of retirement program (other than contributing to a traditional or Roth IRA for yourself).

don’t have a retirement plan, which means too many people avoid taking steps to secure their future.

The bottom line is SEPs are just as easy as deductible IRAs, but they allow much bigger contributions.

Keogh Plans Keogh plans are the self-employed equivalent of corporate retirement programs.

Another negative: You're locked into making the actuarially determined contribution each year.

However, if you make good bucks and are over 50, a defined benefit plan may be worth all the trouble--because it permits much bigger contributions than any other type of program.


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