Dabbs, Hickman, Hill & Cannon, LLP logo

Dabbs, Hickman, Hill & Cannon, LLP

 

319 South Main Street, PO Box 727

Statesboro, GA 30459

Phone: 912-764-6951

 

325 Tattnall Street

Savannah, GA 31401

Phone: 912-233-9004

September 2022

Employee Retirement Plan Selection

Employee Retirement Plan Selection

Offering an employer-sponsored retirement plan is one of the most effective ways to help workers save for retirement. And most provide tax advantages for both employers and employees.


PICK A PLAN
The 401(k) is one of the most common plans employers offer because they’re fairly easy to set up. They also offer higher contribution limits than individual retirement accounts (IRAs). But they require more administrative work. An annual report must be filed with the Department of Labor to disclose the plan’s financial condition, investments, and plan operations.


Smaller employers can consider a Simplified Employee Pension (SEP) or SIMPLE retirement plan. Both are easier to maintain than a 401(k). The SIMPLE plan allows employees to contribute with pre-tax payroll deductions but is limited to companies with 100 or fewer employees. A SEP plan only permits employer contributions.


TAX CREDITS
A federal tax credit of up to $5,000 for the first three years is available to eligible employers that start a new retirement plan. The credit is for ordinary and necessary costs to set up and administer the plan and educate employees.


To help workers save for retirement, an additional $500 credit is available for the first three years — if your plan has an automatic enrollment feature.


Remember, tax credits offset the amount of tax you owe dollar for dollar, but deductions only reduce your taxable income.


IT’S A MATCH
Offering to match employee plan contributions is a valuable perk you can use to attract and retain top talent. The good news is that your matching contributions are tax-deductible.


To start, you’ll need to determine when you’ll begin matching contributions (e.g., after the employee has worked for a year), when your contributions will vest, and how much your business can afford to contribute.


Meet with your financial professional for help deciding which plan is best for your company.


SUBSCRIBE

Enter your Name and Email address to get
the newsletter delivered to your inbox.

Please include name of person that directed you to my online newsletter so I can thank them personally.


CONTACT US

Enter your Name, Email Address and a short message. We'll respond to you as soon as possible.

The information and opinions contained in this web site are obtained from sources believed to be reliable, but their accuracy cannot be guaranteed. The publishers assume no responsibility for errors and omissions or for any damages resulting from the use of the published information. This web site is published with the understanding that it does not render legal, accounting, financial, or other professional advice. Whole or partial reproduction of this web site is forbidden without the written permission of the publisher.