Planning for retirement is a crucial aspect of financial security. Qualified retirement plans, which comply with regulations outlined in the Internal Revenue Code, offer numerous tax advantages to both employers and employees. Our consultants specialize in helping you navigate these plan options to find the best fit for your company's needs and goals.
- Tax deductions on employer contributions.
- Tax-deferred growth on investments.
- Protection from creditors.
- Flexibility in-plan options and contributions.
In the realm of retirement planning, the two primary types of plans are Defined Contribution and Defined Benefit plans. Understanding the differences is key to selecting the right plan for your employees.
Defined Contribution plans specify the contributions made by a company, but not the ultimate benefits received. These plans offer individual accounts for employees, contributing to a sense of personal investment and responsibility towards retirement planning.
- Contribution Limits: As of 2023, the maximum annual contribution limit is subject to adjustments for cost-of-living. Please check our resources tab for the latest limits: whitneypension.com/resources.html
- Flexibility: These plans often allow employees to contribute and may include options for employer matching, enhancing their appeal.
Defined Benefit plans promise a specific monthly benefit at retirement, providing employees with the security of a predictable income. These plans are generally employer-funded.
- Higher Contribution Limits: Ideal for those seeking to shelter more funds from taxes.
- Promises Fixed Benefits: Offers stability and predictability for retirees.
- Profit Sharing Plans: Encourage a company-wide investment in success with plans that allocate a portion of profits to employee retirement accounts.
- 403(b) Plans: Specific to public schools, non-profits, and ministers, these tax-sheltered plans offer unique retirement solutions for special sectors.
- 401(k) Plans: Popular for their flexibility, 401(k) plans allow employees to contribute pre-tax dollars through payroll deductions. Current contribution limits are subject to annual cost-of-living adjustments.
- 401(k) Safe Harbor Plans: By meeting certain criteria, these plans allow for maximum contributions without the need for standard IRS nondiscrimination testing.
- New Comparability Plans: Also known as 'cross-tested' plans, they allow higher contributions for certain groups, often favoring key employees or owners.
- Cash Balance Plans: These hybrid plans offer the stability of a defined benefit plan with the transparency and flexibility of a defined contribution plan.
It's important to note that contribution limits and specific tax laws are subject to change. We recommend consulting with a retirement plan expert or visiting the IRS website for the most current information.
Our consultants are here to guide you through the complexity of retirement plan selection and setup. Contact us to discuss how we can tailor a retirement plan to meet your company's specific needs.
Choosing the right retirement plan is a strategic decision that impacts the financial future of both the company and its employees. Reach out to us to start the journey toward a secure retirement.