From
Your Perspective:
Small business retirement plans
Offering a retirement
plan
There are many good reasons to have a retirement plan.
From
a personal perspective, it lets you save for retirement in a way that
has built-in tax advantages. If the plan covers you alone or you and
one other employee, you can select an option that lets you save as much
money as you can afford. And there are tax benefits to your business as
well if it’s
incorporated,
since the company can deduct contributions made on your behalf on its federal tax return.
If
you have employees, you have to weigh factors such as the financial
commitment you’re making, the federal regulations that apply, and
whether the company, its employees, or both will contribute to the
plan.
As a plan sponsor, you also
have to consider the
fiduciary
responsibility you are assuming in
offering a plan. But on the positive side, you'll also be much more
likely to attract and keep good employees if you offer them a way to
save and invest for the future.
Who can set up a plan?
You can set up a small business retirement plan if you:
Own a business and file Schedule C with your tax
returnHave a subchapter S corporationAre self-employedSit on a corporate board of directorsAre a partner in a business that files a Schedule KWork as a freelancer
