Are Small Business Retirement Plans Available

retirement savings
Person holding savings jar

Retirement is the last thing most of us want to think about, but it’s also one of the first things we should be thinking about. Investopedia suggests that “retirement planning is ideally a lifelong process… it works best if you factor it in from the beginning.”

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

Retirement planning helps individuals, families, businesses and the likes determine their retirement income goals and the steps necessary to achieve those goals.

Some examples of retirement planning include:

  • Identifying sources of income,
  • Calculating expenses,
  • Implementing savings programs,
  • And, managing risk and assets.

Instead of hoping you’ll hit the jackpot at the casino, retirement planning ensures your small business and its employees are set up for a happy future.

Retirement planning doesn’t have to be scary

For most Americans, the scariest part of retirement planning is starting. In a 2020 survey by TD Ameritrade, 58 percent of Americans said they would grade the adequacy of their retirement savings at a C or lower.

It can be hard to navigate the new stacks of paperwork, but also the vocabulary that comes with retirement planning. You can get easily overwhelmed. We thought we’d help by starting you out with a few definitions:

The Employee Retirement Income Security Act of 1974 (ERISA) is a federal law that sets minimum standards for most voluntarily established retirement and health plans in private industry to provide protection for individuals in these plans.

It ensures that plans provide members with information including features, funding, minimum standards for participating, vesting, benefit accrual and funding, fiduciary responsibilities for those managing and controlling assets, etc. 

Individual retirement account – Also known as an IRA, is a savings account with tax advantages that individuals can open to save and invest in the long term. There are several types of IRAs like Roth, Simplified Employee Pension (SEP, and Savings Incentive Match Plan for Employees (SIMPLE). The money cannot be withdrawn before age 59 ½ without a hefty fine.

Defined contribution plan – A defined contribution plan (DC) allows employees to contribute a fixed amount or percentage of their paychecks to an account intended for their retirement. A 401(k) is a popular DC used by many companies and organizations.

Defined Benefit Plan – Unlike a DC, a defined benefit plan (also known as a pension plan) is an employer based program that pays benefits based on factors like length of employment and salary history. The employer is responsible for all of the planning and investment risk.

401(k) – Designed by the United States Congress to encourage Americans to save for retirement, the 401(k) is a retirement savings plan offered by American employers. Employees that sign up agree to have a percentage of each paycheck paid directly into an investment account. The employer can then match part or all of that contribution. Like IRAs, there are a couple types of 401(k)s, traditional, and Roth.

Just like each plan is unique to the individual and the small business owner, Nevada and the United States has their own unique system of workplace-sponsored plans.

Why retirement planning is crucial for small businesses?

The best employees (including yourself) deserve the best plan, one that invests in their future.  

Small businesses (SMB) are defined as privately owned corporations, partnership, or sole proprietorship that have fewer employees and less annual revenue than a corporation or regular-sized business. 

As mentioned, SMB’s are unique in that they have fewer employees, and revenue to draw from. Things like retirement planning can be overlooked in favor of other aspects of the business like drawing revenue, marketing, and plain old day-to-day accounting. This is where an insurance broker like Nevada Benefits can come in handy.

With an array of retirement options, outsourcing your retirement planning to an insurance broker can help you find the perfect plan for your small business and employees. Let an insurance broker show you how to navigate the scary world of retirement vernacular and all the paperwork that comes with it.

Nevada Benefits is your local, affordable, independent insurance and financial services team. We can help you find the best retirement plan for your small business. Call us at 702.258.1995 (Vegas) or 775.300.7997 (Reno), or message us to get started.

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