Many small businesses overlook retirement planning for themselves and don't think that they can afford them for their employees. Retirement plans can be a great benefit for both you and your employee, and there are low-cost options available for small businesses. If you're considering one, you will need professional help to help you evaluate alternatives and set up this benefit for your company.
If you do have a retirement plan, your company handbook will briefly describe it and then refer the employee to the plan documents.
The company in the example below has a 401(k) plan that matches a percentage of the employee's contribution.
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Small Business Notes Small Business Notes employees have the opportunity to participate in a retirement plan which allows employees to save a portion of their compensation for retirement. After one year of service, employees are eligible to participate in the plan. Contributions to this plan are pre-tax dollars, which means the amount specified by the employee is taken from their salary before federal income taxes are taken out. The employee is then taxed on the remaining salary, resulting in additional savings. It should be noted that any distribution from the 401(k) plan will be subject to tax, whether that be early or qualified distribution. Early distribution may also carry a monetary penalty. See your personnel representative for more details and a copy of the Small Business Notes Employee Savings Plan. Contributions by the company are based on the amount contributed by the employee, with Small Business Notes matching 30% of the employee's contribution. As with employee contributions, taxes on company contributions and their related earnings, are deferred until distribution from the plan. Company contributions are not fully vested to the employee until after a five year period; employee contributions are fully vested from the time of contribution. Employees are urged to seek advice from a financial expert prior to any distribution from the 401(k) plan. Small Business Notes also contributes to the 401(k) for employees participating in this plan. |
