Small Business Plans
Truth Investments offers several alternatives for small business owners seeking to start a retirement plan for themselves and/or their employees. Retirement plans can help reduce taxes, attract and keep talented employees, and provide a nest egg for the business owner and its employees. As a special feature, we'll administer and set up your company's plan free of charge if you agree to exclusively offer Truth Investment products to your employees for at least one year.
Simplified Employee Pension (SEP)
SEPs are employer-sponsored plans in which contributions are made to employee individual retirement accounts (IRAs). Employees own their IRA accounts, even after they terminate employment. Employers and employees participating in a Truth Investments SEP plan will have the option to choose any combination of our products to meet their personal investment needs.
SEPs are one of the most popular types of retirement plans because contributions are not requiredeach year. Therefore, employers have the right to forgo employee contributions in years when the company fails to generate enough profit to cover those contributions. Employers also have discretion in determining plan eligibility requirements for employees. Despite such flexibility, discrimination and other general rules still apply.
401(k) for Small Businesses – SIMPLE 401(k)
Savings Incentive Match Plans for Employees (SIMPLE) 401(k)’s are also employer-sponsored plans. The main difference between SEP and SIMPLE plans is that in a SIMPLE plan, contributions can be made by employees in the form of salary reductions. Employee contributions are then matched by employer contributions. Although employers determine eligibility requirements, once an employee becomes eligible, employers are required to make a contribution equal to either:
a) A static, dollar-for-dollar matching contribution up to 3% of each employee's salary, or
b) 2% of compensation for all eligible employees, regardless of whether or not they contribute their own funds.
One of the nice features about SIMPLE 401(k)’s is that voluntary employee contributions may be designated as Roth contributions, meaning retirement distributions will be tax-free, not just tax-deferred.