Author Topic: Small business 401K  (Read 1820 times)

fljason

  • 5 O'Clock Shadow
  • *
  • Posts: 7
Small business 401K
« on: December 11, 2014, 07:19:43 AM »
Hey guys I think this will be the best place to get the answer Iím looking for,
Recently I switched my job from a large corporate office to a 8 person design firm ( I am a landscape architect) the switch made a lot of sense for career and for my sanity, but not the best financial reason. I went from having a really nice 401k with 4% match, to not having a 401k at all, ( the 401k is just sitting and waiting for me to roll it over or whatever with it). 
I want to present the principal of the firm some 401k option and try to get him to sign the company up for a 401k program, what are my options? Why wouldn't a company sign up for a 401k even if they donít plan on matching anything?
If they do not take the bait with the 401k what are my other options. I already fully fund a Roth IRA through vanguard.
Thanks everyone for your advice and please ask any questions if I have left something important out.

tmac

  • Bristles
  • ***
  • Posts: 472
Re: Small business 401K
« Reply #1 on: December 11, 2014, 10:11:16 AM »
I'm currently looking for a retirement plan option for my small business (5 employees, including myself and DH). It's pretty confusing. Some plans require matching, some require that you contribute the same amount to your employees that you contribute for yourself, and some have high administrative requirements. I think. As I said, confusing. If someone could point me in the direction of a low administrative effort, no-required-matching plan, I'd jump on it right away. I really need to call an expert for help, but who would that be who isn't going to try to sell me on something we don't need?

Fallenour

  • Stubble
  • **
  • Posts: 125
  • Location: Earth
  • RE/PM Investor, P2P lender, Business Owner
Re: Small business 401K
« Reply #2 on: December 12, 2014, 08:00:30 AM »
I'm currently looking for a retirement plan option for my small business (5 employees, including myself and DH). It's pretty confusing. Some plans require matching, some require that you contribute the same amount to your employees that you contribute for yourself, and some have high administrative requirements. I think. As I said, confusing. If someone could point me in the direction of a low administrative effort, no-required-matching plan, I'd jump on it right away. I really need to call an expert for help, but who would that be who isn't going to try to sell me on something we don't need?

Corporate 401k plans offer a lot of tax benefits to individuals who own the company, especially owner/operators.

Currently last I checked, you can put up to 51k per year in a corproate 401k as compared to the standard 17.5k.

Additionally they also offer IRA benefits as well through SEP-IRA.

From what ive seen so far, you can do up to 25% matching of standard salary, which is much better than 4%. (Free money is free money though).

Since employee payrolls are tax deductible, as well as you can artificially decrease your pay by putting into your 401k, Id say definitely go for the 401k, especially since the owners control the 401k plan itself. It gives you a lot of flexibility, especially if you are looking to buy rental properties with it.

hodedofome

  • Handlebar Stache
  • *****
  • Posts: 1211
  • Age: 39
  • Location: Texas
Re: Small business 401K
« Reply #3 on: December 12, 2014, 09:37:42 AM »
The small business and solo 401k plans at Vanguard are pretty nice and low cost. I'd look into those.

bwall

  • Pencil Stache
  • ****
  • Posts: 522
Re: Small business 401K
« Reply #4 on: December 12, 2014, 01:38:10 PM »
I'd second what tmac said. I also own my small business and I would be open to offering a 401k, but for a variety of reasons I don't. If it's really important to you, this is what I would suggest:

Research 401k offerings and find a program/plan that you think would be attractive to the owner. Keep in mind: if you ask for a match are you also willing to accept a pay cut? Say a 4% pay cut for a 4% company match? The cost remains the same for the company and the net benefit to you is fewer taxes paid which means more net money available for investing . However, I think that by law if a company offers one person a match they have to offer all. (I think). So, do you think everyone in the office willing to make that trade? Otherwise, don't mention a match b/c you'd be opening a can of worms for your boss.

By researching this you will:

1) Learn a lot about 401k. Including perhaps answering your original question.
2) Show the boss you are serious about it and not just being a complainypants.
3) Help the entire company move forward (perhaps) in smart money management. Maybe.