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Whitaker-Myers Wealth Managers is an SEC-registered investment adviser firm. The information presented is for educational purposes only and intended for a broad audience. The information does not intend to make an offer or solicitation to sell or purchase any specific securities, investments, or investment strategies. Investments involve risk and are not guaranteed. Whitaker-Myers Wealth Managers reasonably believes that this marketing does not include any false or misleading statements or omissions of facts regarding services, investment, or client experience. Whitaker-Myers Wealth Managers has a reasonable belief that the content will not cause an untrue or misleading implication regarding the adviser’s services, investments, or client experiences. Please refer to the firm’s ADV Part 2A for material risks disclosures.

Past performance of specific investment advice should not be relied upon without knowledge of certain circumstances of market events, the nature and timing of the investments, and relevant constraints of the investment. Whitaker-Myers Wealth Managers has presented information in a fair and balanced manner.

Copyright (c) 2023 Clearnomics, Inc. and Whitaker-Myers Wealth Managers, LTD. All rights reserved. The information contained herein has been obtained from sources believed to be reliable, but is not necessarily complete and its accuracy cannot be guaranteed. No representation or warranty, express or implied, is made as to the fairness, accuracy, completeness, or correctness of the information and opinions contained herein. The views and the other information provided are subject to change without notice. All reports posted on or via www.clearnomics.com or any affiliated websites, applications, or services are issued without regard to the specific investment objectives, financial situation, or particular needs of any specific recipient and are not to be construed as a solicitation or an offer to buy or sell any securities or related financial instruments. Past performance is not necessarily a guide to future results. Company fundamentals and earnings may be mentioned occasionally, but should not be construed as a recommendation to buy, sell, or hold the company's stock. Predictions, forecasts, and estimates for any and all markets should not be construed as recommendations to buy, sell, or hold any security--including mutual funds, futures contracts, and exchange traded funds, or any similar instruments. The text, images, and other materials contained or displayed in this report are proprietary to Clearnomics, Inc. and constitute valuable intellectual property. All unauthorized reproduction or other use of material from Clearnomics, Inc. shall be deemed willful infringement(s) of this copyright and other proprietary and intellectual property rights, including but not limited to, rights of privacy. Clearnomics, Inc. expressly reserves all rights in connection with its intellectual property, including without limitation the right to block the transfer of its products and services and/or to track usage thereof, through electronic tracking technology, and all other lawful means, now known or hereafter devised. Clearnomics, Inc. reserves the right, without further notice, to pursue to the fullest extent allowed by the law any and all criminal and civil remedies for the violation of its rights.

  • Writer's pictureLogan Doup

Retirement Plans for a Small Business Owner

Owning a small business is a rewarding investment Americans can make.  Ideally, you get to work for yourself, set your hours, do what you want to do, and ultimately be your own boss.  However, with this freedom, small business owners are stuck with a very important reality: they are responsible for their destiny.  They are responsible for making sales, payroll, tax preparation, retirement savings, and providing reliable and quality services to customers, and if they drop the ball in any of these areas, customers, employees, and their own families can significantly suffer the consequences. 

 

Whitaker-Myers is here to help lighten your load, from tax preparation with our CPA Kage Rush to Retirement planning with our team of Financial Advisors to our dedicated Insurance team.  Although it would be great to do a deep dive into each of these areas, we will focus on retirement savings and ways you, as a small business owner, can save for retirement using tax-advantaged employer-sponsored retirement plans. 

              

The four main Retirement plans for Business owners are:

  • SEP IRA

  • Simple IRA

  • Solo 401k

  • 401k or 403b (pending if you are non-profit vs. profit; for the sake of this article, we are going to refer to it as 401k)

 

Simplified Employee Pension IRA (SEP IRA)

This is a retirement account where an employer can make contributions for eligible employees and claim those contributions as tax deductions.  Another tax benefit of the SEP IRA is that the earnings grow tax-deferred.

Pros:

  • Can contribute up to $69,000 annually or 25% of annual income (lesser of the 2). This means if your annual income is $200,000, the max you can contribute is $50,000 (25%).  However, if your annual income was $400,000, you could contribute $66,000.

  • Inexpensive to set up and maintain

  • Flexible investment options

  • $500 per year tax credit for employers who set up automatic enrollment

Cons: 

  • Contribute equally to all qualified employees

  • Eliminates Backdoor Roth option

 

Savings Incentive Match Plan for Employees of Small Employers (SIMPLE IRA)

SIMPLE IRAs are retirement savings plans where employers can capitalize on tax deductions by making contributions for their employees.  Employers are required to contribute every year until the plan is terminated.  The employer can make non-elective contributions of 2% of the employee’s salary or match dollar-for-dollar up to 3% of the employee’s salary. Contributions made by the employer and the employees grow tax-deferred.

Pros:

  • Low administration and set-up costs

  • Flexible investment options

  • Little employee funding required

  • $500 per year tax credit for employers who set up automatic enrollment

Cons:

  • Low annual contribution Limits

    • $16,000 with a $3,500 catch-up for people 50 years or older

  • Eliminates Backdoor Roth IRA option

  • Only for businesses with fewer than 100 employees


Solo 401(k)

The Solo 401k is a tax advantage plan utilized for small business owners who never plan on hiring employees other than their spouse. Additional requirements for opening a Solo 401(k): you must produce your income from your business, and you or your spouse are responsible for running the business.

Pros:

  • Can contribute both as the employer and employee

  • People under 50 can contribute up to $69,000/annually

    • With a catch-up contribution of $7,500 for those 50 years or older

    • Still only have the tax advantage up to the IRS limit (2024: $23,000)

  • Can make Pretax or Roth Contributions

  • Can contribute to a Backdoor Roth IRA

    • Unlike the SEP IRA and SIMPLE IRA

  • Flexible investments

Cons:

  • As an employer, you can only contribute up to 25% of your compensation

 

Running a business is hard work, and preparing for retirement and running the business simultaneously makes it even harder.  When trying to navigate retirement planning, here at Whitaker-Myers Wealth Managers, we have financial advisors trained to help you identify which plan is right for your situation and help educate your employees, preparing them for retirement.  In business, we all know the most valuable asset is experienced, dedicated employees, and what better way to boost morale and provide an incentive to stay than to help prepare them for the future?

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Whitaker-Myers Wealth Managers is an SEC-registered investment adviser firm. The information presented is for educational purposes only and intended for a broad audience. The information does not intend to make an offer or solicitation to sell or purchase any specific securities, investments, or investment strategies. Investments involve risk and are not guaranteed. Whitaker-Myers Wealth Managers reasonably believes that this marketing does not include any false or misleading statements or omissions of facts regarding services, investment, or client experience. Whitaker-Myers Wealth Managers has a reasonable belief that the content will not cause an untrue or misleading implication regarding the adviser’s services, investments, or client experiences. Please refer to the firm’s ADV Part 2A for material risks disclosures.

Past performance of specific investment advice should not be relied upon without knowledge of certain circumstances of market events, the nature and timing of the investments, and relevant constraints of the investment. Whitaker-Myers Wealth Managers has presented information in a fair and balanced manner.

Copyright (c) 2023 Clearnomics, Inc. and Whitaker-Myers Wealth Managers, LTD. All rights reserved. The information contained herein has been obtained from sources believed to be reliable, but is not necessarily complete and its accuracy cannot be guaranteed. No representation or warranty, express or implied, is made as to the fairness, accuracy, completeness, or correctness of the information and opinions contained herein. The views and the other information provided are subject to change without notice. All reports posted on or via www.clearnomics.com or any affiliated websites, applications, or services are issued without regard to the specific investment objectives, financial situation, or particular needs of any specific recipient and are not to be construed as a solicitation or an offer to buy or sell any securities or related financial instruments. Past performance is not necessarily a guide to future results. Company fundamentals and earnings may be mentioned occasionally, but should not be construed as a recommendation to buy, sell, or hold the company's stock. Predictions, forecasts, and estimates for any and all markets should not be construed as recommendations to buy, sell, or hold any security--including mutual funds, futures contracts, and exchange traded funds, or any similar instruments. The text, images, and other materials contained or displayed in this report are proprietary to Clearnomics, Inc. and constitute valuable intellectual property. All unauthorized reproduction or other use of material from Clearnomics, Inc. shall be deemed willful infringement(s) of this copyright and other proprietary and intellectual property rights, including but not limited to, rights of privacy. Clearnomics, Inc. expressly reserves all rights in connection with its intellectual property, including without limitation the right to block the transfer of its products and services and/or to track usage thereof, through electronic tracking technology, and all other lawful means, now known or hereafter devised. Clearnomics, Inc. reserves the right, without further notice, to pursue to the fullest extent allowed by the law any and all criminal and civil remedies for the violation of its rights.

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