As an owner of a business you have four options for funding a retirement plan. Brian Sauter CFP®, AIF® senior financial planner explains each one, the contribution limits and deadlines.

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CFP® – The CERTIFIED FINANCIAL PLANNER™ certification is by the Certified Financial Planner Board of Standards, Inc. To attain the right to use the CFP® designation, an individual must satisfactorily fulfill education, experience and ethics requirements as well as pass a comprehensive exam. Thirty hours of continuing education is required every two years to maintain the designation.
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CPA – Certified Public Accountant is a license set by the American Institute of Certified Public Accountants and administered by the National Association of State Boards of Accountancy. Eligibility to sit for the Uniform CPA Exam is determined by individual State Boards of Accountancy. Typically, the requirement is a U.S. bachelor’s degree which includes a minimum number of qualifying credit hours in accounting and business administration with an additional one-year study. All CPA candidates must pass the Uniform CPA Examination to qualify for a CPA certificate and license (i.e., permit to practice) to practice public accounting. CPAs are required to take continuing education courses to renew their license, and most states require CPAs to complete an ethics course during every renewal period….(read more)

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Business Owners Retirement Plans: Securing a Bright Future

As a business owner, it is essential to not only focus on the present success of your company but also plan for your future and eventual retirement. While retirement may seem far away, it is crucial to start saving and preparing for it early on. Fortunately, there are several retirement plans tailored specifically for business owners, offering a range of benefits and advantages. In this article, we will explore some popular retirement plans designed to secure a bright future for business owners.

1. Simplified Employee Pension (SEP) IRA:
The SEP IRA is an attractive retirement plan for self-employed individuals and small business owners. With a SEP IRA, business owners can contribute a percentage of their income (up to 25% or $58,000 annually in 2021) into individual retirement accounts for themselves and their eligible employees. This plan offers flexibility in terms of contribution amounts and allows tax deductions for contributions made.

2. 401(k) Plans:
While traditionally associated with larger corporations, 401(k) plans have become increasingly popular among business owners. A 401(k) plan allows business owners and employees to contribute a portion of their pre-tax income towards their retirement savings. The employer can also choose to match a percentage of the employee’s contributions. This plan not only helps attract and retain talented employees but also offers tax advantages for both the employer and the participants.

3. Simplified Employee Pension (SEP) 401(k):
A combination of the SEP IRA and the traditional 401(k) plan, the SEP 401(k) allows business owners to contribute to an employer-sponsored retirement plan while also offering the option to make additional contributions to individual retirement accounts. This plan provides greater contribution flexibility compared to traditional 401(k) plans and can be a suitable choice for business owners with fluctuating incomes.

4. Defined Benefit Plans:
Typically, defined benefit plans were associated with large corporations, but they can also be an excellent option for some business owners. These plans offer guaranteed retirement benefits based on factors such as salary, years of service, and age. Although administratively more complex, defined benefit plans allow business owners to make substantial contributions and provide significant retirement income.

5. Individual 401(k):
Designed specifically for business owners without employees, Individual 401(k) plans offer a unique opportunity to maximize retirement contributions. Whether you operate as a sole proprietor or have a small business with your spouse, you can contribute both as the employer and the employee, allowing for higher contribution limits. This plan offers flexibility and control over investment options, making it an attractive retirement savings option.

It is crucial for business owners to assess their unique needs and circumstances when choosing a retirement plan. Seeking professional advice from financial advisors or retirement plan specialists can help navigate the complexities and select the most suitable option.

In conclusion, planning for retirement as a business owner is paramount to secure a prosperous future. By taking advantage of retirement plans tailored to your specific needs, you can ensure financial security and peace of mind when the time comes to transition into retirement. Start planning early, contribute consistently, and make informed decisions for a retirement that aligns with your business goals and dreams.