In the United States, retirement plans represent financial arrangements, which serve to replace one’s regular employment income post-retirement. Such plans can be established by trade unions, insurance companies, employers, the US government, and various other institutions. Retirement plans are regulated under the Employee Retirement Income Security Act. Employers can set up different retirement plans for themselves and their employees, depending on their needs. So, why some of them fail to think of retirement?
Naturally, if you are the owner of a corporation, retirement planning may not be the most important consideration of yours. Business owners often don’t have the time to think of retirement planning options and rely on their business to accumulate money for post-retirement. It shouldn’t be this way because market fluctuations, times of financial crisis, and other unfavorable conditions can be a challenge for any business. Business owners can take some simple steps as to prepare for the time when they will not have a successful business to run.
There are a number of financial products, which are intended for your retirement years. These include SEP IRAs, emerging business retirement plans, profit sharing plans, and others. Growing companies can benefit from an emerging business retirement plan, by providing for the financial future of their employees and staying focused on their business. Such a plan is offered by Wells Fargo’s Wachovia, for example. The plan goes with a variety of investment options from reputed providers in the investment field. It offers support and investment tools in order for you to choose and manage investment types over time. The emerging business retirement plan is featured with a selection of multimedia tools to build understanding, generate interest, and encourage employees’ participation. A dedicated call center provides support and full service 7 days a week.
SEP IRAs are another financial product suitable for securing one’s financial future. A SEP IRA refers to a simplified employee pension IRA, which is a variety of the individual retirement account in the USA. SEP IRAs are offered to business owners who seek to provide retirement benefits to themselves and their employees. No significant costs are involved when it comes to self-employed persons who have no employees. Those who are self-employed and have employees at the same time should provide the same benefits to their employees. SEP accounts are a variation of IRAs and are treated as such. Therefore, funds in SEP IRAs can be invested in the same way as other types of IRAs.
To be eligible for a SEP IRA, you should meet several requirements. You have to be 21 years of age or older, have worked for your employer for a minimum of 3 of the past 5 years, and received $500 or more in compensation during the tax year.
Profit sharing plans help business owners offer good incentives to employees as to boost the profitability of their businesses. Business performance is linked to contributions. Every employee is entitled to receive a percentage of the profit depending on the earnings of the company. Besides giving employees a sense of ownership, this type of plan is flexible in allowing business owners to determine the amount to be contributed every year. The portion of profits to be shared is at the discretion of business owners. Normally, restrictions are in place as to how and when funds can be withdrawn without incurring penalties. In addition, profit sharing plans may be limited to employees who have worked for the company at least one year. Other limitations include being a full-time employee and 21 years of age or older. Employers’ contributions are tax deducible, but usually up to a quarter of the total payroll compensation.
Comments on this entry are closed.