Retirement Planning for Business Owners
Retirement Planning for Small Businesses
Retirement for Small Businesses in New Jersey
If you’re running a small business in New Jersey, much of your time and energy is tied up in the day-to-day operations of your company. But planning for retirement isn’t optional for anyone, especially if you want to enjoy a comfortable lifestyle. We can help you mitigate risk, reduce your workload, and save potential costs on 401(k) plans. We help ensure your investment choices are cost-effective, prudent, diversified, and competitive. We will help you satisfy your fiduciary responsibility by providing conflict free advice as well as training and education for all employees.
NJ Secure Choice Act
Are you prepared for the NJ Secure Choice Act? Why not get ahead of the New Jersey’s mandatory program for small employers and let our retirement planners help you set up a customized small business IRA. Or, maybe setting up a 401K is the right choice. Considering the larger 401K contribution limits and a more robust lineup of investment choices, it could help your employees and you meet both of your long-term financial goals.
How Can a Small Business Owner Retire?
If you’re working alone as an entrepreneur, a self-employed or solo 401(k) is a great way to fund your retirement. With this type of plan, you can make contributions as the employer and the employee. It’s a great option if you want to maximize your retirement contributions.
Another choice if you have only a few employees might be a simplified employee pension plan (SEP) or even a simple IRA. A simplified employee pension plan is flexible and doesn’t require you to make contributions to your employee’s retirement accounts every year. A simple IRA requires you to match contributions and allows employees to save for retirement.
Do Small Business Owners Get Retirement Benefits?
As a small business owner, you pay Social Security taxes just like an employee. You may take advantage of business deductions that lower your payments to Social Security, but your benefits are calculated from your earnings. You can apply for Social Security as early as age 62 but waiting until 70 offers more benefits.
Most people need additional income during retirement. You can set up one or more retirement accounts to maximize your contributions and prepare financially for when you stop working. Retirement for small businesses in New Jersey will require some planning, but you’re in charge of the type of plan or plans you want to use.
Benchmarking
The department of Labor recommends a benchmarking process to ensure all plan sponsors are keeping up with their fiduciary responsibilities. The official recommendation is every three years for smaller plans, every other year for plans above $10mm, and every year for larger plans. Let us help you with a free Benchmark process so you can compare costs and ensure your plan is compliant
Frequently Asked Questions
Any business type can have a retirement plan that can benefit both employees and employer. There are different rules and regulations, depending on whether your business is treated as a sole proprietorship, partnership, or corporation for tax purposes. Our financial advisors can help you set up a retirement plan for your business that follows the current IRS guidelines.
As an employee, you can contribute up to 100% of your compensation not to exceed $20,500 for the tax year 2022. You may contribute an extra $6,500 if you’re over the age of 50. As the employer, you can contribute up to 25% of your compensation, not to exceed $61,000 for 2022 (subject to certain IRS testing limits). These contribution limits change every year, but our retirement specialists will keep you up to date to maximize your retirement savings.
The Secure Choice Act, signed into law in March of 2019, requires private sector employers covered by the Act to comply with its provisions. Under the provisions many NJ employers will be required to participate in the New Jersey Secure Choice Savings Program administered by the NJ Secure Choice Savings Board. An employer can avoid this NJ mandate by establishing its own business retirement plan. (nj.gov/treasury/securechoiceprogram/)
