Learn More About the Benefits of a 401(k) Over a SIMPLE IRA
Choosing a proper retirement planning option is like finding the perfect exercise routine. When you are young, your body needs certain routines to help build muscle and keep you active. As you age, your goal is the same, but the way to get there changes. Your body may need a lower-impact routine that focuses on your strengths.
Retirement planning works in the same manner. When you are younger, you may have mor options available. Your long-term goal is to save for retirement. However, your needs are not immediate, and you can treat the process as a marathon instead of a print. However, as you age, your needs change. The goal is still to save for retirement, however, your personal needs have changed and must be accommodated while working towards your goal.
What Leads to the Need to Change Retirement Savings Plan Options?
A SIMPLE IRA is a great starter plan for business starting out in providing retirement savings plans to employees. They are often relatively easy to administer and a less expensive option than a 401(k). However, the SIMPLE IRA is a great example of your get what you pay for. While it is a perfectly respectable retirement savings plan option, it does not offer a ton of benefits to employers or employees.
As your business grows, you may not need an easy and inexpensive option for retirement savings planning for your employees. When looking at a 401(k) option, you find the benefits fare outnumber that of the SIMPLE IRA. A 401(k) plan will provide larger tax-deductible contributions, provide more benefits to business owners and the more skilled, highly compensated employees, provide a graded vesting schedule, allow for plan loans, provide better protection services, extended deadlines and more. As a result, these plans become a more desirable retirement savings plan option for employers and a more common option for employees.
Conclusion
Retirement planning options are not a one-size-fits-all concept. Depending on the needs of your business and its employees, you may need to explore several options for retirement savings planning for your employees. However, it is important to understand the benefits of the options available to you. To learn more about whether a SIMPLE IRA, 401(k), or other retirement savings plan option is best for your business, contact the retirement planning specialists at Retirement Plan Services Group. Call Scott Tanker at 609-922-0201 or email scott.tanker@pbsrep.com.