Investing in Your Employees
Your business relies on your employees, so of course you want the best people you can find. Jobseekers are looking for companies that can help them reach their own financial goals. Offering generous benefits – like a retirement plan – is important in attracting and retaining talented people.
Regardless of your situation or the number of employees you have, we can help you navigate your options and find a retirement plan that meets your needs.
A SIMPLE (Savings Income Match Plan for Employees) IRA is a type of qualified retirement plan that allows employees to invest with pre-tax income. The earnings on that investment will grow tax-deferred until your employees begin receiving the proceeds on the investments, when they will be required to pay tax on the money they’ve earned.
SIMPLE IRAs are available for most businesses with 100 or fewer employees. Employers must make either a 2% non-elective contribution for each employee or a dollar-for-dollar matching contribution up to 3%of employee compensation to support their employees’ retirement planning.
- Minimal paperwork requirements
- Low startup and maintenance costs
- Employers receive a tax deduction for contributions made for employees
- Doesn’t allow for as much savings as other employer-sponsored plans
- Cannot be rolled into a traditional IRA without a two–year waiting period from the time the employee joined the plan
Pooled Employer Plans (PEP) offer small businesses the opportunity to join together under one professionally administered 401(k) plan. Unlike MEPs (Multiple Employer Plans), organizations participating in a PEP do not have to be related by industry or region. In addition, if one participating company is noncompliant, the plan is not disbanded as was possible with MEPs.
- Able to reach economies of scale not possible for individual organizations
- Reduced cost, management and liability
- Tax credit opportunities due to the SECURE Act
- Less customization when compared to other 401(k) plans
Farm Bureau Future Advantage 401(k)
Traditional 401(k) plans are company-sponsored retirement accounts that allow employees to make payroll-deducted contributions made on either pre-or post-tax basis. Employers may make matching or non-elective contributions to the plan on behalf of employees. This matching 401(k) option allows employers to invest in their employees’ future and build a culture of loyalty.
Earnings are tax-deferred, so employees will be taxed upon withdrawal.
- Education opportunities
- Ability to offer both traditional and Roth options to participants
- Ability to customize option and investments specific to the business
- Can be expensive for smaller employers
- More administrative and HR responsibilities for the employer
Nonqualified Retirement Plans
Nonqualified retirement plans are designed to fill a specific niche for key executives and select employees looking for additional retirement savings options. Contributions are typically nondeductible to the employer. They are also taxable to the employee, though employees can defer taxes until retirement.
There are four major types of non-qualified plans; together we can find the best way for you to support your employees.
A Plan for You
We know that no business is the same, so when you work with Farm Bureau you can rest assured knowing you’re getting individualized recommendations tailored to fit the needs of your employees, your business and you.