Small Business Owners: Workers financially unprepared for retirement at crisis level.

WASHINGTON - NOVEMBER 03: Small business owner...
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Small business owners can use a qualified retirement plan to attract and retain talented employees with alot of flexibility. This message must to spread to all business owners.

It’s not that owners or employees don’t want a plan. In fact, 37% of small business owners with more than six employees say they are under pressure from employees to offer a retirement plan. Seventy-eight percent of these owners surveyed say having a retirement plan is effective in helping to attract qualified employees.“Our survey found that nearly half (46%) of small business owners were not aware or were unsure that an employee self-funded retirement plan could be offered without having to match employee contributions,” says Anne Arvia, senior vice president of retirement plans for Nationwide Financial. “The provisions in the Small Businesses Add Value for Employees Act before Congress will remove many of the barriers that have kept small businesses from offering their employees a retirement plan.”

Small business owners support concepts proposed in SAVE Act

The SAVE Act encourages small businesses to pool together to offer multiple small employer plans that are much less expensive than single employer plans and simplify an employer’s administrative requirements. It would allow small employers to reduce costs by pooling their resources under a single plan with easier administrative requirements.

There are numerous plan designs available to accommodate any size employer.

Please comment or call to discuss how this affects you and your business.

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The Small Business 401(k) is the Holiday Gift That Keeps on Giving

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Business owners understand that they cannot rely on the government for their retirement. A 401(k) plan can not only help them save for their retirement but also help attract and retain talented employees.

The Benefit That Keeps on Giving and Can Pay for Itself

There’s no doubt about it, giving each of your employees a fat check around the holidays would feel great. But, in the long-term, giving them free money every two weeks — via matching contributions to their 401(k) — can actually work out even better for both you and your employees.  And, for smaller firms, the plan may actually pay for itself outright.

Here’s how 401(k) saving and tax advantages can really add-up.  Consider a scenario of two businesses. Each has seven employees including the owner, and the owner earns $150,000 a year.  One offers a 401(k) plan with a “safe harbor” match to maximize her contributions and one does not provide a retirement plan at all.

So which owner keeps more of her money? In this situation, the owner with the 401(k) is much better off than the owner without a plan.  The owner with a 401(k):

  • Keeps  $2,729 more of her own money
  • Pays $7,465 less in personal and business  taxes
  • Saves $22,087 in tax-deferred income for retirement

That’s just year one. Take a ten year view, and the numbers get even more exciting.  The owner saves nearly $75,000 in taxes and builds a nest egg $305,000 assuming a seven percent annual return over the period.  Tax credits, deductions of any match and plan expenses, and matching can all have powerful effects on your bottom line.

Small business 401(k)s are in everyone’s best interest and bottom line. Now that’s a concept that even Scrooge could love.

There is a human tendency to believe when times are good they will always be good. And when times are bad they will always be bad. This is not the case, the economy and the world will get better. Now is the time to begin a retirement plan for yourself and your employees. It will pay dividends for you very soon.

Please comment or call to discuss how this affects you.

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Whether it s simple or not, retirement plans are suddenly important to small business owners

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Finding skilled help has become more and more difficult for many employers. Providing a well managed qualified retirement plan will attract and retain valuable employees. There is a way to provide a pension fund like plan which will help employees secure a successful retirement.

According to the Bank of America Merrill Lynch Workplace Benefits Report released in June, 66% of small business ownersnow say retirement benefits are important to attracting new talent, and 58% say they are important to driving loyalty. “A few years ago we’d have small business owners who wouldn’t put this [issue] high on the list of things that attract and retain employees,” says Rich Linton, head of Small Business Retirement for Bank of America Merrill Lynch. For years, the premium had been on health care, which is still a top priority among job seekers.But the real change is that small business owners are taking responsibility for making sure their employees are financially literate and able to plan their own financial futures, Linton says. In his 20 years in the retirement business, he has never seen such serious interest in employee retirement plans from small business owners. “That’s an astonishing shift,” he says. “Five years ago it was difficult to get business owners to engage in education beyond the basics of ‘Here’s your 401(k), here are your options, here’s how the plan works,'” he says. Now they are asking financial advisors for help making their employees better savers and investors.

The events of 2008 and 2009 have opened the eyes of many small business owner to the fact that their employees will need to provide for their own retirement. The government may not be there to help.

Please comment or call to discuss.

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