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Anyone have a small business 401k?
Posted on 1/28/17 at 6:58 pm
Posted on 1/28/17 at 6:58 pm
We are in the process of research/setting one up for my wife. She owns a Vet clinic and has about 12 employees. We are going to talk with Fidelity and Vanguard. Just not sure which plan they have available to select. Obviously talking to them will help, but I wanted to see if anyone has any first hand knowledge.
6
Posted on 1/28/17 at 7:58 pm to LSUSUPERSTAR
Do the Simple. It's called that because it's much easier to do. I'm sure they should steer you that direction. Your CPA can explain this to you.
Posted on 1/28/17 at 8:45 pm to LSUSUPERSTAR
The Simple IRA is the way to go. I administer the plan for my employer. You can get the rules and process to establish it online.
Posted on 1/28/17 at 11:04 pm to LSUSUPERSTAR
A simple IRA would work well but it may not allow enough room for your wife to put away a lot of money.
If you got the 401K route, you really need to look at a safe harbor plan. Otherwise, with that type of business, the plan likely will always fail testing. And that's a pain in the rear.
If you got the 401K route, you really need to look at a safe harbor plan. Otherwise, with that type of business, the plan likely will always fail testing. And that's a pain in the rear.
Posted on 1/29/17 at 7:52 am to LSUSUPERSTAR
We just started a 401k plan for our small business. A bank in the area has a plan that has low admin fees with a good selection of major funds, (Vanguard, Pimco, Fidelity and so on). The employee pays the 0.75% admin and the trustee of the 401k is a third party group that keeps up with all the plan documents and testing.
We had a SEP IRA and changed due to the fact that we, the owners, are limited to how much we can contribute since we have to pay the employees the same percentage. It's ok if your employees don't make much but we have three highly compensated employees that were expensive to pay out of n retirement funding.
With the 401k, the employee can defer their own income, the employer can contribute and the beauty is the owners can max out their retirement, up to $54k without maxing out all of the employees.
We had a SEP IRA and changed due to the fact that we, the owners, are limited to how much we can contribute since we have to pay the employees the same percentage. It's ok if your employees don't make much but we have three highly compensated employees that were expensive to pay out of n retirement funding.
With the 401k, the employee can defer their own income, the employer can contribute and the beauty is the owners can max out their retirement, up to $54k without maxing out all of the employees.
Posted on 1/29/17 at 5:40 pm to MadDoggyStyle
I think that is the way we are headed. I like the idea of being able to save $54k. We are going to call and speak with fidelity and vanguard this week. We are trying to close the real estate loan first (buying the building where the practice is located from her former boss). Thanks everyone.
Posted on 1/29/17 at 6:42 pm to LSUSUPERSTAR
I work for a similar sized outfit and we have a Simple Plan IRA through American Funds. Thats the way to go.
Posted on 1/29/17 at 6:53 pm to LSUSUPERSTAR
The max contribution for SIMPLE is currently 12,500 plus the company %maych but......
Check out the rules on the simple, if I remember correctly to be eligible you have to be an employee who is expected to make at least 5K or something, so if it is your wife's company, have her hire you as a consultant or such and then you can double the contributions each year
SIMPLE is great, no fees, no returns, completely portable so that if an employee leaves you or them do not have to do a damn thing
You pair that for both of you plus a Roth (traditional or backdoor) for each and you can put up about 40-45K a year , plus whatever you are already doing at your job
Check out the rules on the simple, if I remember correctly to be eligible you have to be an employee who is expected to make at least 5K or something, so if it is your wife's company, have her hire you as a consultant or such and then you can double the contributions each year
SIMPLE is great, no fees, no returns, completely portable so that if an employee leaves you or them do not have to do a damn thing
You pair that for both of you plus a Roth (traditional or backdoor) for each and you can put up about 40-45K a year , plus whatever you are already doing at your job
This post was edited on 1/29/17 at 6:54 pm
Posted on 1/29/17 at 7:34 pm to LSUSUPERSTAR
If you and your wife are both employees you can both get $54,000 pre-tax, $59,000 apiece if over 50.
Posted on 1/29/17 at 10:10 pm to LSUSUPERSTAR
We have a safe harbor plan. It was set up by The Pension Company in Baton Rouge which files all the paperwork and yearly tax forms for it. All of the money is in each employee's separate 401 K account at Schwab. Each employee controls it and can invest it in whatever is available through Schwab. We love this set-up.
Posted on 1/30/17 at 6:02 am to amgslg
My wife and eye own a clinic with 16 employees so a similar situation. We started when we were much smaller with a simple IRA but that got too cumbersome. We now do the Simple IRA it's so much easier than a 401K plan and you don't have to worry about getting audited or whatever the term is if you put more for your wife in by far than the employees.
From what we looked at with the 401K it's a lot more paperwork and red tape even though you can put more in.. We just raise the match amount from the company to make up the difference, unfortunately for our employees none of them take advantage of a much higher match so it doesn't cost us much more.
From what we looked at with the 401K it's a lot more paperwork and red tape even though you can put more in.. We just raise the match amount from the company to make up the difference, unfortunately for our employees none of them take advantage of a much higher match so it doesn't cost us much more.
Posted on 1/30/17 at 8:38 am to Da Hammer
quote:
We started when we were much smaller with a simple IRA but that got too cumbersome. We now do the Simple IRA it's so much easier than a 401K plan
did you mean you had a 401K to begin with and now have a SIMPLE?
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