Is your retirement plan meeting your current personal and business objectives?
If you have a 401(k), Profit Sharing, SIMPLE, or SEP retirement plan, now is the time to be sure that what you have in place today is what you will need in 2012, or in the case of SEPs, perhaps even in 2011.
??SIMPLE 401(k) plans are great when first starting out, but oftentimes business owners feel constrained by the lower contribution limits as compared to a 401(k), so now is the time to see if an alternative retirement plan might be part of your strategy going forward. With a SIMPLE, due to a provision called the Exclusive Plan Rule, you can switch to a 401(k) plan only in January of the following year, so now is a great time to consider a change.
With SEPs, oftentimes during the course of a year, employees become eligible for the same employer contribution percentage you might pay yourself. This can become quite cost prohibitive for you. If you have a SEP, be sure to confirm with your provider/advisor/CPA what your contribution obligations might be to avoid any unpleasant surprises.
If your 401(k) plan includes a discretionary profit-sharing option, consult with your CPA or tax advisor to see if funding the profit-sharing plan may be to your benefit.
At a minimum, it might be worth your while to see how other types of plans could fit your personal and business objectives. An experienced third-party administrator or actuary can gather census information and run a number of illustrations to show you an array of possibilities, based on how much you would like to contribute and your office demographics.
Tom Zgainer, Senior Vice President of Sales for ExpertPlan Inc, has helped more than 2,200 small businesses with their retirement plans over the past decade.
