Employer-Sponsored Retirement Plans
- Simplified Employee Pension Plans (SEPs)
If you're a small business owner thinking about adopting a retirement plan, you should consider a SEP (simplified employee pension plan). A SEP allows you to make retirement contributions to traditional IRAs (SEP-IRAs) set up for yourself and each eligible employee. (If you don't have employees, you can adopt a SEP for yourself alone.) Your contributions are deductible from your business's income, and excluded from your employees' income. Virtually any business owner can establish a SEP.
- Taking advantage of employer-sponsored retirement plans
There's typically no reason not to participate in an employer-sponsored retirement plan. Your contributions are deducted before income taxes, which lowers your taxable income. You decide how much to contribute, and your employer may even match part of it. The earnings on your investment compound as long as they remain in the plan. You may also be able to borrow a portion of your vested balance. Out of the choices offered, you select the mutual funds or investments where your money will go. And you pay no taxes on earnings until you withdraw money from the plan.
- Understanding defined benefit plans
A defined benefit plan (often referred to as a traditional pension plan) is a qualified employer-sponsored retirement plan that promises to pay you a specified amount at retirement. Although every employer's plan is a little different, defined benefit plans share certain characteristics. To make the most of your benefits, you'll need to read the summary plan description, which is provided by your employer and includes plan details such as information about vesting requirements and payment options.
- What to do after you've been automatically enrolled in your company's retirement plan