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How to provide retirement programs for your employees
The Department of Labor has a special group set up called the Employee Benefits Security Administration that helps distribute pension plans and also can help you as an employer know what your options are.Contact the EBSA for more information and greater detail when you are trying to set up your retirement plan to make sure that you are complying with all of the rules and regulations.
There are a number of different retirement plans that are available and designed particularly for small businesses.These different retirement plans are specifically geared to ensure that both employers and employees are protected and are able to enjoy a safe retirement.The following information is for any small business that hires anywhere from one to one hundred employees. There are three different general retirement plans, based on who the contributor(s) is (are): 1. Both the employer and the employee contribute. The advantage of the SIMPLE-IRA plan is that it doesn't require much paper work, and it simply takes the contribution directly out of the employee's salary.The employer also has the option to contribute to the employee's retirement funds, if desired. The advantage of the 401(k) is that the employee has the ability to contribute more to his or her retirement account than is possible with any other plan.With the 401(k), the employee contributes through salary reduction contributions.The employer also has the opportunity to contribute. 2.If you would rather use a plan that has the employer as the only contributor, your options are: SEP-IRA, Profit Sharing, Defined Benefit, and the Money Purchase Plan. The benefit of the SEP-IRA is that first of all, it's easy for you to set up, and it's easy for you to maintain. The advantage of Profit Sharing is that it lets you as an employer create a very large account balance for your employees.You also determine the amount of your contribution per year. Finally, the advantage of the money purchase plan is that it lets you as the employer put a larger amount of money into your employees' accountants than with any other defined contribution plan. 3.Finally, if you prefer a plan in which only the employer contributes to his or her retirement fund, your options are either a Payroll Deduction IRA or a 401 (k). A 401(k) is beneficial for your employees, because it let's them contribute more money to their account than any other option.This plan particularly, however, requires that you talk to a financial expert.This plan also requires that you annually file IRS Form 5500, and that the plan does not discriminate in the favor of highly compensated employees
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