Retirement Plans for Businesses

must involve participation from a company with the establishment of the plan. These plans can be funded strictly by employee contributions, strictly by employer contributions, or a combination of both employee and employer contributions. A 401(k) is a very common type of corporate retirement plan.

like the 403(b), allow employees to save a portion of their salary through payroll deductions and the money withheld in these plans is not taxed until it’s withdrawn. Other plan formats are available for non-profits, including retirement plans funded by the employer or the classic pension plan that provides retirees with monthly payments that represent a percentage of the salary they had earned while employed.

• 401(k) Retirement Plan: 
  The 401(k) allows employees to save for retirement directly from their paychecks with pre-tax contributions to the plan. Companies have the option to contribute through employer matching, profit sharing contributions or a combination of both. Plans can be designed so that longer term employees are rewarded with larger company contributions than those that leave after shorter periods of employment. It can be a valuable tool for attracting and retaining skilled employees.
  
  
• 403(b) Plans:
  403(b) plans are available for employees of schools, non-profits, and hospitals. It allows employees to save for retirement directly from their paychecks with pre-tax contributions to the plan. Optional employer contributions can also be made.
  
  
• Defined Benefit Plans:
  A defined benefit plan is a type of retirement plan that is funded by the employer. It is a very good way for a business to make large tax deductible contributions. This plan is commonly referred to a pension plan. It is most commonly used in large corporations, schools, municipalities, or governments and professional practices. Benefits are typically paid in the form of a monthly check.
  
  
• Profit Sharing Plans:
  Profit sharing is an employer funded plan that allows for non-mandatory tax deductible contributions that can be as high 25% of each employee’s salary. They can be designed to reward only those employees that stay with the company for the long term.
  
  
• SIMPLE IRA Plans:
  The SIMPLE IRA Plan is funded by both employee and somewhat flexible employer contributions. It is designed for smaller businesses and is called a SIMPLE because it is easy to set up, requires no annual testing for compliance or no tax return to be filed.