As a thriving small business owner, you have probably started thinking about a retirement plan. But what kind of retirement plan is the best fit? A recent article, 4 Things for Small-Business Owners to Consider When Picking a Retirement Plan by Dmitriy Fomichenko offers guidance when navigating the sometimes tricky waters of choosing a retirement plan.
Small business owners have a few options to choose from when it comes to retirement plans specifically designed for them, including self-directed IRAs, SEP-IRAs and Solo 401(k) plans.
Here are four tips to help you consider your retirement plan options.
If your business has full-time employees, an IRA plan is a great option. You can set it up as a self-directed plan (IRA). Or you can include your employees in the plan (SEP-IRA).
- Investment options
Small-business owners can have more investment options with a self-directed individual retirement plan. Many IRA and Solo 401(k) plans permit you to invest in other assets like real estate, precious metals, etc.
- Immediate access to funds
“Checkbook control,” offered by some plan providers, gives you direct access to your retirement funds. Other benefits include:
- Control and understanding of where your funds are being invested.
- Option to select which bank to deposit your money.
- Substantial savings in management fees.
- Borrow from your savings
While it is not generally recommended to borrow money from your retirement savings, some business owners use this option to get their business through a rough season.
Loan availability varies so make sure you know the details.
- IRA = no loan option.
- Solo 401(k) may allow 50% of the account balance or $50,000, whichever is less.
The more you learn about the various options available, the better decisions you can make for your business. You know what your business needs, but finding a way to get what it needs can be overwhelming. There are excellent services available to help your startup get where you want it to go.
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