It can be a complex process to create an effective retirement program that meets the needs of both you, as a small business owner, and your employees.
There are business strategies involved, like how to motivate employees to stay at the business, but there are also tax rules at play.
On top of everything, you are trying to maximize your own savings for retirement. All these things can make it difficult for Maine-based small business owners to figure out what kind of retirement plan is best.
Here are two types of plans to consider:
A defined benefit plan. These plans target the future retirement cost. Current dollars must fund these future benefits. The older the employee population, the more costly these types of plans are, as there are fewer years available until retirement to create the benefit. In the reverse, however, with the average employee age being low and the owner being older, a defined benefit plan could be quite effective.
A defined contribution plan, such as a 401(k) plan. This type of plan is usually based on a percentage of an employee’s pay, with the idea that contributions would grow over time.
There are other matters to consider when figuring out which benefit plan would work best for your small business. Things like cost, integration with Social Security, and investment strategies and management are all important factors. Filler & Associates has experience with these issues. Schedule an appointment to discuss them today.