401(k) Individual Retirement Plans for Your Business

401(k) plans are one of the most commonly used retirement savings options in the market today. The variety of investment options within most 401(k)s make them ideal for a broad range of employees and investment strategies. Aggressive investors may choose to focus on higher risk stocks, while those who are intimidated by investing can opt for a highly diversified investment targeted for their expected retirement date. Offering a 401(k) plan is a great way to encourage employee retention, and reduce your company’s taxable income at the end of the fiscal year. In some cases, offering a 401(k) for the first time may also make you eligible for a tax credit. The Avenue can help you decide what type of 401(k) and what funds options are best for your business and your employees.

Traditional 401(k)

Designed for companies with more than 25 employees, a traditional 401(k) is one of the most widely used employer-sponsored retirement programs. Employers can contribute up to 25% of their total annual payroll, not to exceed the lesser of 100% of compensation or $54,000 total per employee (including maximum employee deferral of $18,000 for 2017). Employee contributions are tax deferred, and employer contributions are tax deductible A vesting schedule may be established to incentivize employees to stay with the company long term.

Safe harbor 401(k)

In a Safe Harbor 401(k), employer contributions are required to be 3% of compensation, or dollar for dollar employee-matching up to 4%. These contributions are immediately 100% vested, favoring high earning employees and those that are approaching retirement. Contribution limits are the same as in a traditional 401(k).

SIMPLE 401(k)

In companies with more than 25 but fewer than 100 employees, a SIMPLE 401(k) can provide a lower-cost solution to the employer. SIMPLE 401(k)s require less paperwork and fewer fees than a traditional 401(k). The current maximum employee contribution amount for a SIMPLE 401(k) is $12,500.

Benefits of Matching Contributions

Aside from the tax advantages your business will receive, matching employee contributions is a terrific way to show your employees that you care about them and their futures. Our advisors will provide you with the guidance you need to determine what type of matching structure is best for your business.

Managing 401(k) Distributions

When the time comes for your employees to retire, we will assist them with understanding how and when to access the funds they saved in their 401(k) account. We want to ensure that the hard work and dedication they showed working for you will be repaid with an easy, well-managed retirement. Navigating the tax code can be tricky, but our team will continue to show your employees the same level of care you did as their employer.