Best retirement plan for small company
I have a client who owns an insurance agency. He would like to set up a retirement plan for his 4 employees and himself. He does not want to use a SEP because of concerns regarding employees having access to the money as a premature distribution. He would also like a to make large salary deferral contributions for himself. A small 401k plan might be the best option. Could we accomplish the same thing with a Simple?
Permalink Submitted by Denise Appleby on Fri, 2008-02-15 18:54
You would have the same accessibility issue with the SIMPLE IRA, as participants can withdraw their SIMPLE IRA balances whenever they like.
If the goal is to make salary deferral contributions for the highest amount possible, and limit withdrawal options for employees, then the 401(k) plan would fit those criteria.
See the Employer Plan Comparison Chart for Small Businesses -for Plan Year- 2008 at http://www.retirementdictionary.com/quick-reference.htm for a comparison of the feature and benefits of plans for small businesses. The vesting schedule may be an important feature for any employer contributions made to the 401(k) plan.