|Saving for retirement and building a retirement income management plan that you can depend on are two of the most important financial challenges we face during our working years. As a business owner, you are responsible not only for preparing for your own needs, but also for offering your employees the resources and support they need. Our financial advisors are here to help you and your employees with this challenge. They will listen to your objectives and business situation and tailor a comprehensive plan to help you achieve your personal goals as well as help your employees achieve theirs’. Our financial advisors offer you experience and unbiased advice supported by a full range of financial products and services from thousands of investment and insurance choices from well-known companies through LPL Financial and its affiliates.*
Our Financial Advisors stand ready to work with you to tailor the following range of solutions to your unique retirement savings and income management needs:
Retirement Savings Plans for Businesses
- 401(k) and 403(b) Retirement Savings Plans
- SEP Plans
- Buy/Sell Agreement Funded with Life Insurance
- Profit Sharing Plans
- Money Purchase Program
Retirement Savings Plans for Individuals
- Individual Retirement Accounts (Rollover, Traditional, Roth, SEP, CD)
- Funding Options include mutual funds and Simsbury Bank CDs
- Life Insurance
- Term Life
- Whole Life
- Universal Life
- Variable Universal Life
- Deferred Variable Annuities
Retirement Income Management Services
- Income Management Planning
- Single Premium Immediate Annuities
- Variable Annuities
- Retirement Income Annuities
Profit-sharing plan for small businesses with few or no employees and varying profits
- Flexible contributions can vary with your business’s performance
- Deduct contributions from your company’s federal income tax
Who is it for?
A Qualified Retirement Plan (QRP), also known as a Keogh, may be appropriate for small businesses with few or no employees and for self-employed individuals with fluctuating profits or limited financial resources. A Keogh is a profit-sharing plan for small businesses that offers greater flexibility in choosing the percentage of income to contribute each year. It does not require an annual contribution and offers an efficient cost-control system.
As a small business owner, you can deduct contributions for yourself and your employees from your company's federal income tax.
Annual Contribution Amounts
- Employers can contribute up to 25% of compensation, up to $46,000 for 2008 ($49,000 for 2009). The maximum compensation on which contributions can be based is $230,000 for 2008 ($245,000 for 2009). These amounts may be subject to cost-of-living adjustments.
- Contributions do not have to be made every year, but if employers contribute to their own accounts, they also must contribute to the accounts of all eligible employees.
- Contributions must be made by the company's tax filing deadline (including any extensions).
- QRP owners may also make contributions to a Roth or Traditional IRA in the same year, provided eligibility requirements are met. For more information, refer to the Roth and Traditional IRA Contribution Guidelines.
Eligible rollover distributions that are not rolled over to another qualified retirement plan or a traditional IRA are subject to a mandatory 20% withholding.
Generally, there is a 10% penalty for withdrawals before age 59½, however some exceptions apply:
- Death or disability of the account owner
- Withdrawals made in equal installments over the account holder's life expectancy (substantially equal periodic payments)
- Distributions made to the employee following separation from service after reaching age 55
- Certain medical expenses and health insurance costs for unemployed individuals and un-reimbursed expenses exceeding 7.5% of adjusted gross income (AGI)
The IRS mandates that QRP participants who own 5% or more of the business must begin taking required minimum distributions at age 70½. There is a 50% penalty if you do not withdraw the required minimum distribution beginning the year you turn 70½ or if you take less than the required amount. Please note: RMDs have been waived for 2009.
Please see IRS Publication 560 at www.irs.gov for further details regarding Keogh eligibility, contributions, withdrawals, and plans.
Minimum to Open
Like a 401(k) plan for small businesses.
- Easy set-up, cost effective and less complicated tax filings
- For companies with fewer than 100 employees
- Employer match contributions may be tax deductible
Who is it for?
A SIMPLE IRA is for sole proprietors and businesses with less than 100 employees looking for an easy way to provide a tax-deferred retirement plan to their employees. It can be established for the benefit of the employer, employees, or both.
Employers must have steady income to meet mandatory contribution requirements, while employees must have earned at least $5,000 in any two previous years and expect to earn at least the same in the current year.
What can I invest in?
Your investment options include over 13,000 mutual funds, in addition to stocks, bonds, options, and exchange-traded funds (ETFs).
Employees can contribute up to 100% of their compensation to a maximum of $10,500 ($13,000 for those 50 and over) for 2008 and a maximum of $11,500 ($14,000 for those 50 and over) for 2009. These amounts may be subject to cost-of-living adjustments.
Employers have two contribution options:
- They can match employee salary contributions up to 3% of compensation. This can be reduced to 1% in any 2 out of 5 years3.
- They can make a non-elective contribution of 2% of compensation for all eligible employees (including those who decide not to contribute for themselves), regardless of whether the participant contributes.
- The employer must establish the plan before October 1st of the year that the account is being opened
- Employer contributions can be made annually before the tax-filing deadlines
- Employee contributions must be deducted and deposited monthly from their salaries
Withdrawals are taxed as ordinary income. There is a 10% penalty for withdrawals taken before age 59½, unless the withdrawals are made for one of the following reasons:
- Higher education expenses for you or a family member
- Qualified first-time home purchase expenses ($10,000 lifetime limit)
- Death or disability of the account owner
- Certain medical expenses and health insurance premium payments of unemployed individuals and un-reimbursed expenses
- Withdrawals made in equal installments over the account holder's life expectancy
- If the withdrawal occurs within the first 2 years of participation in the Simple IRA plan, the 10% penalty is increased to 25%.
There is a penalty of 50% if you reach age 70½ and do not start the Required Minimum Distribution (RMD) from the account, or if you take less than the required amount. Please note: RMDs have been waived for 2009.
Please see IRS Publication 560 at www.irs.gov for further details regarding SIMPLE IRA eligibility, contributions, withdrawals, and plans.
Minimum to Open
The cornerstone of any retirement savings or income management plan is a well thought out financial plan. Please contact our financial advisors for a free consultation, or call your banker to arrange for a joint meeting with them and one of our financial advisors.