Business Owners

401(k) vs. SIMPLE IRA: What Should a Small Business Consider?

Both can help business owners and employees save for retirement, but they differ considerably in contribution limits, employer responsibilities, costs, administration, and plan flexibility. A SIMPLE IRA can offer relatively straightforward administration, while a 401(k) can provide greater plan-design flexibility. The right structure depends on the business, workforce, and owner's objectives.

What Is a Safe Harbor 401(k)?

A Safe Harbor 401(k) is designed to satisfy certain annual nondiscrimination testing requirements when the employer meets specified contribution, vesting, and notice requirements. It can be particularly useful for some businesses where owners and highly compensated employees want to maximize contributions, but whether it makes sense depends on the company's workforce and objectives.

When Should a Small Business Consider Starting a 401(k)?

A business may consider a 401(k) when it wants to help employees save for retirement, strengthen its benefits package, attract and retain talent, or provide owners with additional retirement-saving opportunities. Company size, employee demographics, costs, administrative responsibilities, and business objectives should be evaluated before establishing a plan.

How Can Employee Benefits Help a Small Business Retain Employees?

Compensation is more than salary. Retirement plans, life and disability benefits, and other workplace benefits can contribute to an employee's overall financial well-being and may make an employer's compensation package more competitive. The appropriate benefits depend on the company's workforce, budget, and objectives.

What Happens to a Business If an Owner or Partner Dies?

The death of an owner can affect ownership, management, employees, cash flow, and the owner's family. A properly structured succession or buy-sell strategy can establish how ownership interests may be transferred and how the transition may be funded. Planning before an unexpected event can help reduce uncertainty for everyone involved.