Retirement Plans For Small Business That Work?

You find it hard to get employees for your small business.

Maybe the problem is your retirement plan. If it stinks, or you don't even have one, qualified people aren't interested to work for you.

Scout around and study the many retirement plans for small business. Zoom into one that suits you, your business and your employees' needs plus that's of good quality and value. You'll hook the employees you want.

Here are several retirement plans for small business that might work for you and your business.

1. Simplified Employee Pension Plan (SEP IRA)

If you've a small number of employees and are looking for a plan that's really low cost with low maintenance, consider this plan. It's very easy and cheap to set up and administer.

The plan is funded with tax-deductible employer contributions, and you must cover all eligible employees. Employee contributions are not allowed.

There's no "plan document" and you don't need to file annual reports with the IRS. Contributions can vary from year to year; good times you contribute more, lean time less. And you don't have to make contributions every year.

Eligibility - any business owner or self-employed person. For employees, those who have worked for you for 3 of the past 5 years and who earned at least $500 from you in previous year.

Contribution Limits - 25% of compensation (if you're an employee of your own corporation) up to $46,000; 20% of self-employment income (if self-employed) up to $46,000.

Employees cannot contribute but you the employer must contribute to eligible employee accounts the same salary percentage you contribute to your own.

2. SIMPLE IRAs

These plans are good for your employees and allow employee contributions. The plans mandate an employer match.

Trouble is, a SIMPLE IRA won't let you "cart away" as much for yourself. Your annual contributions are generally limited to $10,500 ($13,000 if you're 50 or older) plus an employer matching contribution (up to 3% of your salary).

If you've less than 10 employees, a SIMPLE IRA is a great way to get started.

Eligibility - employer with 100 employees or less who doesn't maintain any other retirement plans. For employees, those who have ever earned more than $5,000 in any 2 years prior and who will earn at least $5,000 in current year.

Contribution Limits - mandatory dollar-for-dollar employer match of up to 3% of salary (or as low as 1% for some years) or mandatory employer contribution equal to 2% of salary (limited to maximum contribution of $4,600) regardless of employee's contribution (if any).

For employees, $10,500 plus employer match up to 3% of salary. (If you're self-employed, you can contribute $10,000 plus match to your own account). Additional $2,500 if you're aged 50 or older.

3. Profit Sharing Plans

A profit sharing plan gives you a slice of your company's profits. You make annual contributions to your account, but because they're based on your company's performance, they'll likely vary from year to year.

Eligibility - any business owner or self-employed person. For employees, those who worked at least 1,000 hours in past year; 2 years, if no vesting period.

Contribution Limits - 25% of salary (20% of self-employment income) up to $46,000. Employees cannot contribute.

For this plan, you may need to hire a pro to set up and administer it.

4. 401k

If you've more than 25 employees, you might be surprised to find that a 401k isn't as expensive to create and maintain as you might have thought. This is due to the competitiveness amongst 401k providers that leads to the cheaper pricing.

For example, some plan providers offer a 401k package for businesses with 25 employees or less that costs about $1,400 per year in annual fees, plus $28 per employee.

Eligibility- any business. For employees, those who worked at least 1,000 hours in the past year; 2 years, if no vesting period.

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