As we approach 2024, do you know if you have the “right” retirement plan? There is not a one-size-fits-all solution for retirement plans. Each company’s specific demographics, cash flow, and goals should factor into the equation.
We meet many practices that have maintained a SIMPLE-IRA plan for many years. For some owners, this is the perfect retirement plan, but for others, it is inadequate and should be upgraded.
Should your SIMPLE-IRA be upgraded?
How would you know if it’s time to upgrade your SIMPLE-IRA?
- Are you bumping up against the IRS’s contribution limits, and would like to invest more for retirement?
- Is your practice experiencing prosperity (i.e., your gross revenue, profit margin, and net profit are increasing)?
- Is your CPA emphasizing the need for additional tax deductions?
- Do you need an additional tool to recruit, reward, and retain top talent?
If so, a credentialed Fiduciary Plan Advisor could help you explore a Safe Harbor 401(k) plan with customized profit-sharing language unique to your situation.
The benefits of a Safe Harbor 401(k) plan
Upgrading your SIMPLE-IRA to a Safe Harbor 401(k) plan can help you:
- Increase your total contribution from $20,000 to $70,000 or more.
- Redirect a significant number of payments from the IRS and your state to you and your employees.
- Attach a 6-year graded vesting schedule to a portion of what you’ll be contributing on behalf of your employees.
In today’s world, setting up and maintaining a customized 401(k) plan is easy and inexpensive. For many years, many in the financial advisory or tax arenas have recommended a SIMPLE-IRA plan over a 401(k) as an inexpensive, “simple” (no pun intended) payroll-deduction retirement investment program.
A SIMPLE-IRA is often a great start for many new or very small practices. But if your practice and your profits have grown, it may be time to reconsider your options.
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- Do You Have the ‘Right’ Retirement Plan? - November 29, 2023
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