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Pre-Tax Benefits For Small Business

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  • 1. Pre-Tax Benefitsfor small businesses
    Rep Name
  • 2. Why Start a Retirement Program?
    • RETIREMENT
    • 3. TAX- SAVINGS
    • 4. CANNOT PREDICT FUTURE, ONLY PREPARE
    • 5. ATTRACT HIGHER QUALITY EMPLOYEES
    • 6. RETAIN CURRENT EMPLOYEES
    2
    Revised 1/27/2011
  • 7. Retirement – a “three-legged” stool
    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.
    3
    Revised 1/26/2011
  • 8. Pre-Tax Growth vs Post-Tax Growth
    *Assuming 25% tax rate, 10% rate of return, compounded only monthly
    4
    Revised 1/26/2011
  • 9. Your Tomorrow Starts Today
    • Investing early pays off due to compounding interest
    • 10. What is compounding interest?
    • 11. The process of reinvesting interest to earn additional interest
    • 12. The more frequent the compounding, the more you earn
    The example below shows the difference a head start can make
    5
    Revised 1/26/2011
  • 13. Revised 1/26/2011
    6
  • 14. 7
    Revised 1/26/2011
  • 15. Revised 1/26/2011
    8
  • 16. 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.
    9
    Revised 1/26/2011
  • 17. Retain 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. . . .
    10
    Revised 1/26/2011
  • 18. How Do You Get Money In?
    11
    Revised 1/26/2011
  • 19. How Can You Maximize Your 401(k)?
    12
    Revised 1/26/2011
  • 20. Your 401(k) plan, easy as 1-2-3
    3 Simple decisions to start your plan today
    • Eligibility
    • 21. Money Manager
    • 22. Optional Match/Vesting
    13
    Revised 1/26/2011
  • 23. Possible EmployerMatching/Vesting Contributions
    14
    Revised 1/26/2011
  • 24. IRS/DOL
    Money Manager
    Participants
    Employer
    Payroll
    Bank
    Record Keeper
    Non-Paychex 401(k) Paradigm
    15
    Revised 1/26/2011
  • 25. The Paychex Advantage:
    A Seamless Flow of Contributions
    Investment
    Provider
    Paychex
    Client
    Power of Paychex Integrated 401(k)
    16
    Revised 1/26/2011
  • 26. What Paychex Does For You
    • Required Legal Documents
    Adoption Agreement
    Plan document
    Summary Plan Description
    • Preparation of Form 5500
    • 27. Preparation of Forms 1099-R and 945
    • 28. Quarterly IRS nondiscrimination testing
    • 29. Quarterly management reports
    • 30. Quarterly participant statements
    • 31. Daily valuation of account balances
    • 32. Account access via participant website and automated phone system
    • 33. Toll-free phone support
    • 34. Loan modeling and administration
    • 35. Roth option
    • 36. Discretionary profit sharing plan
    • 37. Deferral calculations for pre-tax and Roth
    • 38. Electronic recordkeeping and fund transfer each pay period
    • 39. Payroll integration of employee and employer contributions and census data
    • 40. Enrollment meeting and enrollment kits
    • 41. Automatic enrollment
    17
    Revised 1/26/2011
  • 42. Money Manager Options
    18
    Revised 1/26/2011
  • 43. Small BusinessFlexible Spending Accounts
  • 44. What is a Flexible Spending Account?(FSA)
    • It’s part of the IRS tax code: Section 125
    • 45. Allows employees to take certain out-of-pocket expenses on a pre-tax, rather than a post-tax basis:
    Medical
    Dental
    Vision
    Over-the-counter items
    With a Dr’s Prescription
    Dependent Care
    20
    Revised 1/26/2011
  • 46. Benefits of an FSA
    • Employee:
    • 47. Federal Income Tax Savings
    • 48. Tax savings on FICA
    • 49. State Tax Savings
    • 50. Employer:
    • 51. Savings on FICA tax
    • 52. Workers’ Comp Savings (CA only)
    APPROX. 12% SAVINGS ON PAYROLL TAXES
    APPROX. 25% - 45% SAVINGS ON EXPECTED GOODS AND SERVICES
    21
    Revised 1/26/2011
  • 53. FSA has 3 “buckets”
    Plan Features
    3) Out-of-pocket medical, dental, vision, and over-the-counter expenses
    Insurance premiums
    2) Dependent Care expenses
    22
    Revised 1/26/2011
  • 54. What Paychex Does For You
    • Required legal documents and plan changes
    • 55. Regular non-discrimination testing
    • 56. Enrollment meeting and enrollment materials
    • 57. Payroll integration (payroll clients only)
    • 58. Participant website and toll-free support
    • 59. Employer and employee status reports
    • 60. FSA Debit card
    • 61. Weekly claim processing
    • 62. Direct deposit of reimbursements
    • 63. Discretionary employer contributions allowable through employer funded FSA
    23
    Revised 1/26/2011