Your SlideShare is downloading. ×
Small ret
Upcoming SlideShare
Loading in...5

Thanks for flagging this SlideShare!

Oops! An error has occurred.

Saving this for later? Get the SlideShare app to save on your phone or tablet. Read anywhere, anytime – even offline.
Text the download link to your phone
Standard text messaging rates apply

Small ret


Published on

Published in: Economy & Finance

  • Be the first to comment

  • Be the first to like this

No Downloads
Total Views
On Slideshare
From Embeds
Number of Embeds
Embeds 0
No embeds

Report content
Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

No notes for slide


  • 1. Small Business Retirement Plans
    Updated 07/29/2008
  • 2. Why Start a Retirement Program?
    • 3. TAX- SAVINGS
  • How much will I get from Social Security?
    Read the following excerpt from the Social Security Administration’s website:
    “Social Security was never meant to be the sole source of income in retirement.”
    A comfortable retirement is based on a “three-legged” stool of Social Security, company-sponsored retirement plans and personal savings.
  • 7. Tax Savings
    There are two forms of tax savings:
    Annually, the typical Paychex owner will save 30%-40% on every dollar put into a retirement plan. While this is important, the true POWER of a 401k plan is the Tax-Deferred (or Tax-Free through Roth Provision) growth the tax law allows.
    Outside of Post-Tax Annuities, no other vehicle allows your savings to grow without being taxed on a yearly basis.
    This power allows retirement dollars to grow at an incredible rate with time.
  • 8. Pre-Tax Growth vs Post-Tax Growth
    *Assuming 25% tax rate, 10% rate of return, compounded only monthly
  • 9. So you don’t want to take advantage of I.R.S. section 401?
    Questions to consider if you don’t want a forced savings plan:
    • Will You have the discipline to save EVERY month?
    • 10. Will You take the time to make good investment decisions?
    • 11. Will Your investment returns even keep pace with inflation?
    *Assuming 25% tax rate, 10% rate of return, compounded only monthly
  • 12. Cannot Predict Future, can only Prepare for it
    In addition to the battle against inflation as you can see in the chart on the right, retirees are living longer and longer.
    Recent studies have shown that a typical retiree can expect to live 20+ years. Therefore, one must acquire a large nest egg.
  • 13. Cannot Predict Future, can only Prepare for it
    How Big of a Nest Egg?
    According to current life-expectancy figures, you could live 20 to 30 years after you retire at 65. To make sure your savings last as long as you do, experts say, you can’t afford to withdraw more than 4% to 5% from your nest egg each year, adjusted annually for the rise in the cost of living. (Of course, you’ll also receive some income from Social Security.) Here’s how big a personal nest egg you’ll need at retirement, depending on the annual withdrawals you plan to take.
  • 14. Attract Top Employees
    Studies show that without benefits, outside of acquaintance or luck, a business owner cannot attract the best quality EMPLOYEES.
    Research shows small businesses need retirement benefits*
    While some research shows that small business retirement plans are too expensive for their potential customers, a new survey underscores the fact that employers might want to reconsider that notion.
    By Editorial Staff
    While some research shows that owners think small business retirement plans are too expensive, a new survey underscores the fact that employers might want to reconsider that notion. Fidelity finds that 49% of workers with a retirement plan say the would not take a job with a company that doesn't offer one. 68% percent of employees said that a retirement plan is critical or very important. Just 36% of employers said it was critical or very important to their staff recruitment and retention efforts.
    *© 2007 Employee Benefit News and SourceMedia, Inc.
  • 15. Retention of Current Employees
    If you’re not offering a retirement plan to your employees, don’t be surprised to lose them to a competitor that does!
    Misconceptions about 401(k)s could cost Small Business Owners
    By Lynn Gresham
    Forty percent of workers in small companies say they would leave their job for one that provided a 401(k) plan, according to a survey conducted by Harris Interactive and sponsored by ShareBuilder 401(k), a subsidiary of ING Direct. . . .
  • 16. Retention of Current Employees
    Only 3 ways an owner can retain their employees:
    1) $$$$ - Pay so much money that an employee cannot afford to leave.
    2) ENVIRONMENT - Make the environment so great that employee doesn’t want to leave even though they can make more money elsewhere.
    3) LOW-COST BENEFITS - For the cost of one half (1/2) of a person for health insurance, you can offer a retirement plan to your whole company.
  • 17. OK, so I think I need a Plan
    Questions we will now answer:
    How do I get money in a plan?
    How much can I get in?
    What are the 3 things I need to know to start a plan today?
    How much is this going to cost me?
    Will the government help pay for my plan?
  • 18. How Do You Get Money In?
  • 19. How Can You Maximize Your 401(k)?
    0% to 4%
    Profit Sharing
    0% to 25%
    Automatic Per Pay Period Contribution
    $16,500 Salary Deferral
    (1%-96% of Pay)
    + $5,500 Catch up Contribution for those Age 50 and over
    New Comparability,
    Age Weighted
    Annual Maximum up to
    $$ 49,000 $$
  • 20. Your 401(k) plan, easy as 1-2-3
    3 Simple Decision to Start a Plan Today
    • Optional Company Match
    • 21. Vesting schedule
    • 22. Multiple Investment Options
  • Non-Broker Investment Options
    Schwab Instl Select S&P 500
    Pioneer Global High Yield
    Delaware Corporate Bond
    Vanguard Inflation-Protected Secs
    American Century Target Maturity 2025
    Federated Automated Cash Management Trust
    FA Overseas
    FA Dividend Growth
    FA Equity Growth
    FA Growth Opportunities
    FA Mid Cap II
    FA Small Cap
    FA Balanced
    FA Government Income
    FA Intermediate Bond
    FA Strategic Income
    FA Money Market – Prime Fund
    Columbia Acorn International
    Quant Foreign Value
    SSgA International Stock
    Quant Emerging Markets
    Vanguard Small Cap Value Index
    Keeley Small Cap Value
    Columbia Mid Cap Value
    Delaware American Services
    Columbia Marsico 21st Century
    Janus Contrarian
    FA Freedom Funds 2010
    FA Freedom Funds 2015
    FA Freedom Funds 2020
    FA Freedom Funds 2025
    FA Freedom Funds 2030
    FA Freedom Funds 2035
    FA Freedom Funds 2040
    FA Freedom Funds 2045
    FA Freedom Funds 2050
    $125 per month
    $180 per month
    • Each offer multiple investment choices
    • 23. No front-end or back-end sales charges
    • 24. 100% of deferral gets invested
    • 25. No charge for initial “Enrollment Meeting”
  • Employer Matching and Vesting Options
  • 26. IRS/DOL
    Money Manager
    Record Keeper
    Non-Paychex 401(k) Paradigm
  • 27. The Paychex Advantage:
    A Seamless Flow of Contributions
    Power of Paychex Integrated 401(k)
  • 28. What Paychex Does For You
    • Required Legal Documents
    Adoption Agreement
    Plan document
    Summary Plan Description
    • Quarterly management reports
    • 29. Quarterly participant statements
    • 30. Nondiscrimination reports
    • 31. Roth contributions
    • 32. Daily account balance updates
    • 33. Loan Provision
    • 34. Toll-free employee telephone access
    • 35. Participant Website via the Internet
    • 36. Electronic recordkeeping and fund transfer
    • 37. Preparation of Form 5500
    • 38. Preparation of Forms 1099-R and 945
  • $1,500 Tax Credit for a New 401(k) Plan
    The Details
    By starting a new retirement plan this year, your company will receive a tax credit equal to 50% of the first $1,000 in administrative expenses. You will receive this credit for three years, beginning in 2009 when filing your company returns for tax year 2008. This credit is available to employers who have less than 100 employees earning at least $5,000 in the preceding year.
  • 39. Paychex is the #1 Provider of 401(k) Plans in America*
    *As independently ranked by PlanSponsor Magazine, July 2008.
  • 40. Partner Investment Options
    Fixed/Target Managed
    Actively Managed