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Choosing the Right Retirement Plan

Choosing the Right Retirement Plan. Why Offer a Retirement Plan?. Help employees save for a more secure future Attract and retain quality employees Tax savings for employees & employer Help secure your own retirement. Who Can Start a Retirement Plan.

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Choosing the Right Retirement Plan

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  1. Choosing the Right Retirement Plan

  2. Why Offer a Retirement Plan? • Help employees save for a more secure future • Attract and retain quality employees • Tax savings for employees & employer • Help secure your own retirement

  3. Who Can Start a Retirement Plan • There’s a plan for every type of business • Sole proprietor • Partnerships • C Corporation • S Corporation • LLC & LLP

  4. IRA-based Plans • Payroll Deduction IRA • SEP IRA • SIMPLE IRA

  5. IRA-based Plans • Filing requirements • Type/size of employer who might choose an IRA-based plan • Pros and cons • Common mistakes

  6. IRA One Rollover Rule • Bobrow v Commissioner v Pub 590 • Announcement 2014-15 • One rollover allowed per taxpayer per 12-month period • Generally effective in 2015

  7. IRA One Rollover Rule • What is a rollover? • A trustee-to-trustee transfer is not a rollover • How to meet this new one rollover rule

  8. Profit-sharing Plans • Must cover all employees age 21 and who work 1,000 hours • Contributions are discretionary each year • Allocated by formula set in plan • Profits not required

  9. Profit-sharing Plans • Filing requirements • Type/size of employer who might choose a profit-sharing plan • Pros and cons • Common mistakes

  10. 401(k) Plans • Must cover all employees age 21 and over who work 1,000 hours • Employees defer a portion of salary • Deferrals can be pre-tax or Roth • Employer contributions and match

  11. 401(k) Plans • ADP/ACP testing • Safe Harbor 401(k) Plan • Automatic Enrollment 401(k) Plan • Roth 401(k) feature

  12. 401(k) Plans • Filing requirements • Type/size of employer who might choose a 401(k) plan • Pros and cons • Common mistakes

  13. Defined Benefit Plans • Gives you a definite benefit (monthly income) at retirement • Has yearly funding requirement set by an actuary • Must cover all employees age 21 and over who work at least 1,000 hours

  14. Defined Benefit Plans • Filing requirements • Type/size/age of employer who might choose a defined benefit plan • Pros and cons • Common mistakes

  15. Didn’t Get it Right? • Use IRS correction program to fix: • Missed contributions • Omitted employees • Skipped plan amendments • Some mistakes corrected without IRS contact

  16. Questions and Resources www.irs.gov/retirement RetirementPlanQuestions@irs.gov 877-829-5500 Newsletters Extra! Extra! Hear The Latest Retirement News and Hot Topics!

  17. Contact Information Linda Thomas-Glenn Employee Plans Specialist Tax Exempt/Government Entities 215-553-7611 Linda.H.Thomas-Glenn@irs.gov

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