If your client owns a small business, they’re already juggling a lot. Between managing clients, balancing budgets and keeping operations moving, retirement planning often falls to the bottom of the list. Yet, choosing the right retirement plan can be a game-changer, not just for the business owner but also for their employees. The good news? Small and mid-sized businesses have three flexible, cost-effective options worth considering: SEP plans, SIMPLE IRA plans, and Individual (k) plans. Each plan offers unique advantages, depending on your clients’ goals, their workforce and how much administration they’re willing to take on. Let’s compare these three plans side by side. Consider this a quick guide to selecting the best fit. SEP Plan: Flexibility First The simplified employee pension (SEP) plan is about as straightforward as a retirement plan can get. Employers make contributions, but employees don’t. It keeps things simple, but it also means that employees don’t have the opportunity to put in their own money. There are, however, several benefits to offering a SEP plan. • Contribution limits are generous: Up to 25% of compensation, capped at $70,000 for 2025. • Paperwork is minimal: No annual Form 5500 filings, and no tracking employee deferrals. • Fairness is required: If the employer contributes for herself, she generally must contribute the same percentage of compensation for all eligible employees. (Alternative SEP plan documents may permit other allocation formulas, but they are rarely used.) CHOOSING THE RIGHT RETIREMENT PLAN FOR YOUR SMALL BUSINESS SEP, SIMPLE, or Individual (k)? By JODIE NORQUIST, CIP, CHSP Ascensus 24 NEBRASKA INDEPENDENT BANKER
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