Small Business Retirement Plans
I am working with a client who owns a small business. We are discussing the different retirement accounts (SEP, 401K, Simple IRA, ….) available to him, however he is not thrilled with any of them, because as an employer he does not want to contribute to some of the staff even though they would pass the minimum qualifications of say a SEP account. Any suggestions on a plan that would work for him. (He is looking for a plan that he could contribute based on performance and not have to contribute the same percentage for everyone)
Permalink Submitted by Denise Appleby on Mon, 2009-03-09 21:22
There is no qualified plan that would allow him to contribute based on performance. However, there are various methods/features that he can use to limit contributions to certain employees- if his business first the profile. These include his age, if he is older than most employees, which would allow him to weigh contributions based on age; and vesting schedule if he has high turnover.
Additionally, different methods – such as social security integration- can be used for allocation contributions, which can allow him to receive the ‘lion share’, if he gets paid a higher salary than his employees.