Small Businesses Retirement Plan Options

Goals

Determine the available options to grant 401K to the employees, the cost of this benefit to the employer per head, and the best approach for small businesses. The information will be used for the budget planning of a small business.

Early Findings

Small Businesses Retirement Plan Options

  • For the retirement plan of the employees of an S Corp-type of small business, the typical cost for employers will range from $2,000 to $4,000 annually in administrative and insurance expenses.
  • For those plans that need an S Corp employer to have a contribution, the percentage is usually 3-4% per employee.
  • The "401(K) small business retirement plan" is for all types of public or private companies with over 20 employees.
  • This plan is one of the typical retirement plans that are being offered by companies.
  • This plan is more flexible with regard to investment options such as mutual fund investments.
  • Employees can have a maximum contribution of $18,500 in defered pay. For 50 years old and older employees, the amount is $24,500.
  • The maximum total contribution is $54,000.
  • Companies can have the option to contribute the same amount as what their employees are contributing.
  • There is also an option to contribute a maximum of 25% of an employee's pay through profit sharing. The maximum total amount for this is $55,000.
  • Some companies are offering their services to maximize the contributions of the employers and their employees on their retirement plan benefits.

Benefits of Retirement Plans

Proposed next steps:

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Our initial research provided details of the available options and other information on the retirement plans. Given that there are available sources on this topic, we propose to continue with the research to provide additional details of the three available retirement plan options (401K, etc) for S Corp small businesses for both owner and employees. We will include the description of the options, benefits, costs and other notable information. We also propose to provide 5-7 best practices that describe how businesses should approach granting 401K benefits.
We also recommend proceeding with the research to provide 2-3 case studies of small businesses (can be named or unnamed) that tackle how they dealt with having 401K benefits for their employees. We will describe their challenges, cost insights if available, their approach, and available success indicators.