Defined Benefit. Money Purchase. Profit Sharing. Simple, SEP and IRA. With the myriad of retirement programs available to the employer of today, how do you choose the plan most appropriate for your needs and for the benefit of your loyal employees? The fact is that there is no best type, or “one size fits all.” The choice of what type of plan to use is an individual one, depending on factors such as employer goals and available cash flow.
As an employer you are ready to start a qualified retirement program for your employees, but where do you start? At CIG we will sit down with you and discuss what the options may be and help you to decide what would be the most appropriate retirement plan for your business circumstances. It is an important decision and deserves the proper attention due to the varied funding implications and the effects to the employer and on employee morale as it becomes an intricate part of their benefit program.
Qualified retirement plans can generally be classified as either defined benefit or defined contribution plans. Defined benefit plans determine the benefit amount each participant will receive at retirement age and estimate how much must be contributed each year to accumulate the necessary future funds. Interest rates, ages of participants, and other factors will have an effect on the calculation. The investment risk rests on the employer. Defined contribution plans generally put a percentage of current salaries into the plan each year, which may vary year to year. The amount at retirement will depend on the investment return and number of years until a participant retires. The investment risk rests on the participant.
Our discussions with you will include your personal thoughts on monetary contributions, business ownership structure, number of employees, stability of cash flow, retirement time horizon, and cost of administering a plan. Our goal is to help you build a plan to achieve your retirement dreams, and to further solidify your relationships with your valued employees.