October - 2024 UPCOMING REMINDERS
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chieving financial security for you and your family is no small task. With inflation and the allure of signing up for yet another monthly service, saving money can feel like an uphill battle. In this month’s newsletter, read about 5 ideas that can help you save money on your road to building wealth.
October 31 - Halloween
Also learn about several tips to protect your Social Security number, why you should think twice before tapping retirement accounts to pay for emergencies, and ideas that can help your kids thrive this school year. Please pass this information on to anyone that may find it useful and call if you have any questions or concerns.
HERE’S A SIMPLE WAY TO OFFER RETIREMENT BENEFITS Offering retirement benefits can help your business attract the best employees. One way to do this is by offering an IRA, which comes without the administrative costs and hassles of a 401(k). Here are your two primary choices: SIMPLE IRA (Savings Incentive Match Plan for Employees) A SIMPLE IRA is designed for businesses with 100 or fewer employees and offers a straightforward way to provide retirement benefits. Both employers and employees can contribute to a SIMPLE IRA. In 2024, employees can contribute up to $16,000 of their own earnings, along with an extra $3,500 if the employee is age 50 or older. The employer must either match an employee’s contributions up to 3% of compensation, or contribute 2 percent of an employee’s earnings, up to the 2024 compensation limit of $345,000. New SIMPLE plans must be established between January 1st and October 1st, so while it is too late to create a SIMPLE for this year, it is perfect timing to plan implementation for next year. SEP IRA (Simplified Employee Pension) Under a SEP IRA, the employer makes contributions to an employee’s IRA (only the employer can make
a contribution). In 2024, the contribution limit is either 25 percent of the employee’s salary or $69,000, whichever is lower. Unlike a SIMPLE IRA, employers are not required to make annual contributions to a SEP IRA. Unlike a SIMPLE plan, SEP IRAs can be established and funded at any time prior to the tax filing due date (plus extensions). Because of this, SEP IRAs are a popular tax planning tool for sole-proprietors as a way to reduce taxable income when filing their tax return. WHAT YOU NEED TO KNOW Here are some of the benefits of offering either an SEP or SIMPLE plan: • Compete for employees with affordable retirement plans. The SEP IRA and SIMPLE IRA help small business owners provide an easy and low-cost way to offer a retirement plan. You can differentiate your company by offering one of these plans and being transparent with how you calculate employer contributions.
• The employer and employee can both reap tax savings. Employees can reduce their taxable income with contributions to a SIMPLE IRA, while businesses can claim contributions to their employees’ retirement plan as a deduction on its tax return for SEP IRAs. • Employees can still contribute to their own individual IRA. Let your employees know that in addition to having either an SEP or SIMPLE account through your company, they may also qualify to contribute to their own traditional IRA or Roth IRA. • 401(k) plans are still an option. Being a small business doesn’t preclude you from establishing a traditional 401(k) retirement plan if you’re willing and able to deal with the extra administrative work. Please call if you have any questions about whether a SIMPLE or SEP retirement plan might be right for your business. As always, should you have any questions or concerns regarding your tax situation please feel free to call.