If you’re a local business owner, you’re juggling many priorities: growing revenue, managing expenses, supporting your team and planning for your own future. What if one tool could help with all these goals?
A workplace retirement plan might be that solution and can, directly or indirectly, offer benefits that extend beyond simple savings.
Double the tax advantages. Starting a retirement plan can deliver immediate tax advantages. For the business, employer contributions are tax-deductible. And as a participant in your company plan, your pretax salary deferrals are excluded from income taxes; your investments within the plan are tax-deferred until distributed. Many plans now offer Roth options that allow tax-free withdrawals in retirement.
Local businesses may also qualify for federal tax credits that help offset startup costs, employee education expenses and plan administration fees. Additional credits may be available for auto-enrollment features and employer contributions made during the plan’s first five years.
A competitive edge in hiring. In today’s labor market, offering a retirement plan can differentiate your business from competitors and help improve employee retention.
Many plans also provide access to financial education tools and resources, helping your employees make informed decisions about saving, investing and planning for retirement. This support can lead to greater employee satisfaction and productivity, contributing to a positive work environment for your business.
More flexible than state-sponsored options. If you live in a state requiring an employee retirement program, you might be considering a state-sponsored plan. While these programs can provide a starting point, they typically offer fewer investment options, lower contribution limits and limited design flexibility.
Establishing your own workplace retirement plan lets you customize features for your business needs to control administrative costs, set contribution limits and offer employees a wide range of investment options. This added control in plan design can lead to better outcomes for your business and your employees.
Reducing a hidden risk in your own retirement planning. Business owners often have as much as 80% of their net worth tied up in their businesses, according to the Exit Planning Institute. While that demonstrates commitment to success, it also creates significant financial risk to the owner.
Relying solely on a future business sale to fund your retirement can be precarious. Market shifts, timing challenges or limited buyer interest could derail those plans. By building personal assets through your employer-sponsored retirement plan, you can gain financial flexibility and reduce the risk of having your retirement lifestyle depend entirely on one event.
Getting started. With various retirement plan options available, determining which one fits your business best can feel overwhelming.
A qualified financial advisor can help you navigate these decisions, explaining the trade-offs between different plan types and identifying which option best suits your unique situation. They can also help you understand eligibility requirements and ensure the plan you choose aligns with your business goals and personal financial objectives.
Starting a workplace retirement plan represents an investment in your future, your employees and the long-term success of your business.
This article was written by Edward Jones for use by Joe Oliver, your local Edward Jones Financial Advisor.
Edward Jones, Member SIPC
Joe Oliver is a lifelong Oxfordian, husband, father, and financial advisor with Edward Joes Investments. Joe services business owners and individual investors by helping them accomplish their financial goals. For a complimentary financial consultation, connect with Joe at Joe.Oliver@Edwardjones.com.
Joe Oliver, CFP®,AAMS™
Financial Advisor
2250 Baltimore Pike
Oxford, PA 19363
484-702-9311
www.edwardjones.com/joe-oliver
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This article is intended for informational, entertainment or educational purposes only and should not be construed as advice, guidance or counsel. It is provided without warranty of any kind.