Employer Sponsored Retirement Plans for Small Business
Webinar Agenda Why you should set up a plan? Business Benefits Employee Benefits What are the available plans to choose from? Individual Retirement Accounts (IRA) Defined Contribution Plans Defined Benefit Plans Steps to maintain your retirement plan Q&A
Preston Sharps Christine Sisler
Why Should You Set Up An Employee Retirement Plan?
Business Benefits Free Deductible Credit Compounding Interest Better Employees Reduce Costs
Employee Benefits Contributions through payroll deductions Employee contributions are Retirement assets can be carried from one employer to another Investment gains are
What Types of Retirement Plans are Available? Individual Retirement Accounts (IRA) Defined Contribution Plans Defined Benefits Plans
The Basics of IRA Based Plans
Payroll Deduction IRA Employer with employee(s) No annual filing requirement for employer Employee contributions through payroll deductions
Payroll Deduction IRA 2011 Annual Contributions: = $5,000 = $6,000 Withdrawals permitted anytime Contributions ti are vested td
SEP IRA Employer with employee(s) No annual filing requirement for employer 2011 Annual Contribution: 25% of Compensation No more than $49,000
SEP IRA Employers decide contributions year to year y Must be offered to all employees: At least 21years of Age Employed by employer 3 of last 5 years with compensation of $550/year Withdrawals permitted anytime* Contributions are vested
SIMPLE IRA Salary Reduction Plan with almost & a bank or financial institution handles paperwork Employer with Employees No annual filing requirement for employer
SIMPLE IRA Employee salary reduction contributions and employer contributions 2011 Annual Employee Contributions: = $11,500 = $14,000
SIMPLE IRA Employer Matching Options: 100% of the first 3% or 2% ofemployee s compensation Withdrawals are permitted anytime* Employee payroll deduction contributions are vested
SIMPLE IRA Must be offered to all employees: Who have earned income of at least $5,000 in any prior 2 years Who are reasonably expected to earn at least $5,000 in the current year
Basics of a Defined Contribution Plan
What is Similar Salary Reduction Plan with almost Permits high level of salary deferrals by employees Employer with employee(s) Plandocument required Annual filing of Form 5500 is required
What is Similar Must stbe offered to all employees: ees At least 21 years of Age who worked at least 1,000 hours in previous year Withdrawals permitted after specified events occur
401(k) Contributions 2011 Annual Contributions from Employees: = $16,500 = $21,000 2011 Annual Contributions fromthe Employer: 25% of Employee s Compensation No more than $49,000 Match Mthamount set by plan document
401(k) Requires annual test to ensure plan does not discriminate Employee salary reductions are immediately vested Employer contributions may vest over time
Profit Sharing Plan
Profit Sharing Plan Discretionary employer contribution set by plan document Contribution is limited to: Lesser of 100% of compensation or $49,000 Contributions may vest over time according to plan document
Basics of a Defined Benefit Plan Fixed, pre established benefit for employees Primarily funded by the employer Employer with employee(s) Plandocument required Annual filing of Form 5500 is required
Basics of a Defined Benefit Plan An actuary determines annual contributions Employer generally required to make contributions setby plan document Must be offered to all employees: At least 21 years of Age who worked at least 1,000 hours in previous year May vest over time
Maintaining Your Retirement Plan 1. Watch for Law Changes
Maintaining Your Retirement Plan 2. Perform periodic reviews of your plan 3. Get an independent reviewer to check your plan
Maintaining Your Retirement Plan 4. Subscribe to Retirement News for Employers IRS Newsletter Go To www.irs.gov/retirement and select tnewsletters
Q & A My Bank Fanpage: http://www.facebook.com/mybank www.mybank4.com/insites Preston Sharps psharps@mybank4.com Christine Sisler csisler@mybank4.com