Retirement Plans For Your Business

Advantages to the Employer:

• Contributions are tax deductible.
• Contributions and cost are totally flexible.
• Reporting is minimal.
• The plan is very easy for employees to understand.
• There is little or no administrative expense

Disadvantages to Employer:

• Contributions must be made for part-time and seasonal employees.
• Employees can withdraw funds as soon as they are put into the account.
• Employees are always 100% fully vested, there are no forfeitures to reduce employer expenses.
• Employees control investments.
• Allocation methods which reduce employer costs cannot be used.

Advantages to Employees:

• Annual contributions are not taxed currently to the employee
• Earnings on the account are not taxed.
• Participants have the right to direct investments.
• Participants may also have a deductible IRA, subject to income level and filling status.
• Funds can be withdrawn at any time. Distributions are inclinable in taxable income in the year received. A 10% penalty may apply if that participant is under age 59 1/2 when a distribution is received.

Disadvantages to Employees:

• There is no guarantee as to future benefits.
• Investment risk rests on the participant.
• There is no assurance as to the frequency and amount of employer contributions.
• Bankruptcy protection from creditors may not be afforded under the law.

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