Setting Up Retirement & 401(k) Plans

Which Retirement Plan is Best For You?

If you are an individual and are eligible to contribute to a 401(k) Plan, it may be your best, and probably lowest cost, option to save for retirement. Otherwise, you can contribute to a traditional or Roth IRA (Individual Retirement Account).

If you own a business, with or without employees, click on the brochure to the right for a good starting point in selecting the right type of plan. Although the brochure is from The American Funds, a leading mutual fund provider in the U.S., the information is generic, and you'll find the decision tree is very helpful. 

In my opinion, the right plan design starts by deciding the amount of the contribution you’d like to make to the plan. For self-employed individuals, and small or large businesses, a 401(k) can be an excellent option. As a Certified Plan Fiduciary Adviser, I can walk you through the selection of a plan provider, which funds to offer, and a third party administrator who keeps track of contributions and helps keep the plan (and you) in compliance. The annual administration fee should easily be offset by the potentially large amount of tax deductions, and resulting tax savings, you’ll enjoy. 401(k) plans, for individuals or businesses, offer some great benefits:

  • Participants can choose to make traditional pre-tax, or after-tax Roth contributions, or a combination of the two.
  • Contributions can be much higher than IRAs: $19,000 for 2019, plus an additional $6,000 if you’re over 50, for a total of up to $25,000 per year.
  • Significantly reduce your taxes with pre-tax contributions.
  • Roth contributions in a 401(k) have no phase out for higher income people who would not otherwise be eligible to contribute to a Roth.
  • You may be able to invest in very low cost institutionally priced funds, without front end commissions, sales charges or holding periods.
  • You can easily exchange funds at no cost.
  • Loans may be available to provide penalty free withdrawals if the loan is repaid under the terms of the plan document.

If you would like to discuss the possibility of setting up a new retirement plan, or if you have a plan which is not being serviced very well, please give me a call to discuss how I might help you.