Information on Simple, IRA's, 401Ks, keogh, and other pension alternatives for small business. More great financial tips for QuickBooks Users.
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Pensions for Small Business

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Pension rules change annually.  The IRS regs can be complicated.  Use this site to gather a general understanding. Then refer to an expert. 
Click here to discuss your pension plan options with Richard Greenwald, a financial advisor with 18 years experience specializing in pensions.
Popular business pension choices (0-few employees) 401(k) Plan: The 401 (k) plan is ideal for small retail business owners, writers, consultants and professionals without employees. Contributions to this plan can come from part-time income but  if you work for another company full-time and contribute to their 401 (k) plan, you cannot exceed the maximum allowable annual contribution between the two plans. This plan  permits the owner to contribute plus have his/her company  match a percentage of your personal contribution up to an annual total of $51,000 (2013) or 100% of your income whichever is less.  The limit of personal contributions for year 2013 is $17,500 ($23,000 if you are over 50),  and your company can contribute 25% of your earnings up to a maximum annual contribution.   See Official IRS source

A 2013 example: You are 54 years old and earn $96,000 and an employee of your own S-Corp. Under the new law, your maximum contribution to a single individual 401k plan would consist of the following: 25 percent of your salary contributed for profit sharing as a business ($28,000), the maximum allowed  elective deferral as an employee ($17,500), plus a catch up contribution for being over 50 ($5,500).  Total $51,000.

The contribution is deducted from  income, lowering your tax burden. Once the business begins to hire employees,  the 401(k) plan will incur expensive administrative costs and required expensive contributions to the employee's account.

Click here  for an easy to read guide to choosing a 401K plan that discusses the different types of 401Ks, the vesting issues, the contribution amounts and more.

Simplified Employee Pensions (SEPs):  An IRA is set up for the owner and any employee in the plan. Contributions are made only by the business, not the individual (as in a 401K).  The business can make a choice each year, at tax time, how much (if any) to contribute regardless of what was contributed in prior years.   Maximum contribution limits are, the lesser of 25% of earned income or $51,000 for 2013.   A big advantage of SEPs is the minimal administrative requirements to set up and maintain this type of plan. Employees who have earned $550 for 2013 per year in 3 out of the last 5 years must be included in the plan. Your broker or mutual fund can help you with the paperwork to get started.
Learn more- The ABCs of SEP Plans
Checklist to see if you are in compliance with IRS rules and regs.

SIMPLE IRA: The  SIMPLE IRA allows employees to contribute a percentage of their income up to $11,500 ($14,000 if over age 50)  of each paycheck and the employer, to contribute a percentage as well. (1 to 3%) Or, the employer can choose to make a fixed contribution of 2% of compensation for all eligible employees. Your broker or mutual fund can help you with the paperwork to get started.
Learn more- The ABCs of Simple Plans
 Checklist to see if you are in compliance with IRS rules and regs.
Simple plan "fix-it" guide

Terminating A Simple Plan

Profit Sharing and Defined Contribution Plans.  Through 2001 the tax regulations in effect made these plans ideal choices for small business owners looking to fund amounts up to $30,000 per year in their retirement.  But with the increased contribution limits to plans like the SEP and SIMPLE that  have no administration costs, the profits sharing/defined contribution plan is becoming an obsolete choice.  Be prepared to pay a pretty penny to close this type of plan in favor of one of those mentioned above.  Terminating a plan requires bundles of paperwork and lots of crossing t's and dotting the i's to get a clean bill of health from the IRS.   Before making a decision to change, talk to a pension expert who will calculate your savings and provide you with the benefits and detriments of making a change.   The limit for defined contribution plans under for 2011 $49,000.  The annual compensation limit  is  $245,000.

IRS Pension Website The IRS has a website devoted to pension options:
IRA's Learn about when you can fund an IRA, and when a Roth, regular, or deductible IRA's is the best choice.  Discover the dos and don't.  Also See article on financial aid for Coverdell education IRA  Top
  Click for official source: IRS Announces 2013 pension plan limitations


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IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that, any U.S. federal tax advice contained in this communication is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding any tax related penalties that may be imposed on you or any other person under the Internal Revenue Code or (ii) promoting, marketing, or recommending to another party any transaction or matter addressed in this communication




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