The IRS and the Department of Labor’s Employee Benefit Security Administration have issued a guide to help small businesses choose a retirement plan. “Choosing a Retirement Plan for Your Small Business” is a joint project undertaken by the two agencies.
The publication encourages small businesses to establish plans, and argues that there are advantages having a plan. “Experts estimate that Americans will need 70 to 90 percent of their preretirement income to maintain their current standard of living when they stop working. Now is the time for you and your employees to start planning for retirement,” the guide says. “As an employer, you have an important role in helping America’s workers save.”
The guide cites two other advantages to starting a retirement plan:
- retirement plans may help attract and retain qualified employees; and
- employer contributions and employee pre-tax contributions are tax deductible.
The publication provides basic information about retirement plans and how they work, and provides introductions to payroll deduction IRAs, simplified employee pensions, SIMPLE IRAs, profit-sharing plans, 401(k) plans, safe harbor 401(k)s, automatic enrollment 401(k)s and defined benefit plans. It also provides an extensive, detailed chart that provides a variety of information concerning IRA-based plan, DC plans and DB plans.
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