Small Business Retirement Plans Orange County

• A 401(k) is the most common retirement savings plan created by employers.
• Money is transferred from payroll deductions into the retirement account.
• The investment options within the plan are from a predetermined selection that applies options in various risk and timing categories.
• The plan allows for the employee to choose funds they deem most appropriate (in some cases, this process can be done with guidance).
• Choices represent stocks, bonds, and combinations of stocks, bonds, mutual funds, and ETFs.
• A 401(k) has the highest contribution limit of
• Many companies often offer a 401(k) match (a contribution of additional money, up to a certain percentage, as an employee benefit and incentive for employees to increase their own contributions).
• The money transferred into the 401(k) account reduces taxable income, dollar for dollar. A $60,000 per year income with a contribution of $15,000 into the retirement account, will only pay federal income tax on $45,000.
• Contributions to the account grow tax-free and are only taxed once withdrawn in retirement.
• Can be combined with other types of retirement accounts, such as profit sharing, cash balance plans, or an individual IRA.

A pooled employer plan has all the same guidelines as a Single Employer 401(k). As the name eludes to, these plans are “pooled” with multiple companies (often unrelated) to reduce overall costs.

Pooled Plans are meant to simplify, so all companies participating in the “pool” share the same plan document. The pooled plan provider purposefully designs a basic structure to apply to all the companies participating in the pool.

A Pooled employer plan has a lower cost structure, time, and administrative commitment, but that also means you can be unaware if things go wrong and you are not aware until it is too late to do anything to mitigate the situation.

A traditional 401(k) single-employer plan can be built to be extremely effective and competitive. Incorporating strong index funds, flat admin fees, advisory support, and fiduciary liability protection can prove to be a win-win for both employer and employees alike.

An entrepreneur without employees could consider implementing a 401(k) plan for themselves and a spouse. The Solo 401(k) plan also follows the same guidelines as an employer-sponsored 401(k), including contribution limits and the ability to be combined with other types of retirement accounts.

There are also other types of retirement accounts, similar in many ways to 401(k)s that may sound familiar, referred to as 403(b), and 457s retirement plans. There are some unique differences, such as the type of employer, the funds made available, and some very specific employer rules that can be implemented. Since these types of plans only apply to certain businesses, such as non-profit, and public sector employers, please contact us directly if you seek further information.

• The Simple IRA was created to give employers with less than 100 employees and at least $5,000 or more in annual earnings.
• Employees can elect to contribute to their Simple IRA and the employer is required to make either matching or non-elective contributions.
• Similar to the other retirement plan options, employee contributions are made via payroll deduction and pre-tax, so again growth is tax-free, and only taxed upon withdrawal in retirement.
• Lower thresholds for contribution limits as compared to a 401(k).
• Not eligible for employer profit sharing or cash balance plans.

• SEP IRAs can be set up for any size business, including an individual business owner.
• This is a very easy plan to administer with minimal requirements
• A SEP IRA is a unique plan in the sense that it is funded solely with employer contributions.
• Employers can contribute up to 25% of the employee’s contribution into their SEP IRA account with a $66,000 cap for 2023.
• Each employee must be must receive the same percentage.
• Like a 401(k) a SEP IRA can be combined with profit-sharing plans, but not other retirement accounts such as a cash balance plan, or an individual IRA.

• Employer payroll deduction into a ROTH IRA for an individual employee.
• Since it is a ROTH IRA, the employee receives no tax deduction or reduction in taxable income for participation.
• Follows IRA contribution rules of $6,500 per year (50+ allows for an additional $1,000 as a catch-up provision for a total of $7,500 per year) for 2023.
• The employer is only responsible for registering and setting up payroll deductions.
• Limited fund options with less than optimal choices available.
• The employer is not responsible for questions about the program, managing investment options, processing distributions, or giving investment/tax advice.
• Employees themselves can opt-out and back in at any time they choose.
• Employees are automatically set to a 5% savings rate of their gross pay but can adjust any time.
• Employees are responsible for their own account online, by phone, or by mobile app.

If it is a matter of being compliant as an employer, being fairly hands-off, allowing your employees to manage their own retirement plan, ease of implementation, low cost for employer and employees, better selection of funds, and an overall better user experience then you want to consider another option…, Icon.

Icon is a retirement savings solution with a 4-year track record of developing a technology that very simply built a better model. Icon works like CalSavers, but the difference is that they’ve unified workplace savings, personal retirement, and portfolio management into a single solution, that has a foundation of being designed by a Registered Investment Advisor.

Icon is employer and employee-friendly. They only charge a small one-time setup fee, no ongoing plan administration fees, no plan design is required, and no federal filing requirements. They also don’t skimp on their fund offerings; their portfolios are built with low-cost funds from leading asset managers. W2 and 1099 employees can equally take advantage of planning for their retirement.

Icon as compared to CalSavers, or even a traditional 401(k) plan and its variants, may be worthy of closer examination.

Contact us today and we can get a proposal for your business. There are no additional charges for us to guide you through a better solution.