Pre-Tax Benefits For Small Business


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Pre-Tax Benefits For Small Business

  1. 1. Pre-Tax Benefitsfor small businesses<br />Rep Name<br />
  2. 2. Why Start a Retirement Program?<br /><ul><li>RETIREMENT
  3. 3. TAX- SAVINGS
  6. 6. RETAIN CURRENT EMPLOYEES</li></ul>2<br />Revised 1/27/2011<br />
  7. 7. Retirement – a “three-legged” stool<br />Read the following excerpt from the Social Security Administration’s website: <br /> “Social Security was never meant to be the sole source of income in retirement.”<br />A comfortable retirement is based on a “three-legged” stool of Social Security, company-sponsored retirement plans and personal savings. <br />3<br />Revised 1/26/2011<br />
  8. 8. Pre-Tax Growth vs Post-Tax Growth<br />*Assuming 25% tax rate, 10% rate of return, compounded only monthly<br />4<br />Revised 1/26/2011<br />
  9. 9. Your Tomorrow Starts Today<br /><ul><li>Investing early pays off due to compounding interest
  10. 10. What is compounding interest?
  11. 11. The process of reinvesting interest to earn additional interest
  12. 12. The more frequent the compounding, the more you earn</li></ul>The example below shows the difference a head start can make<br />5<br />Revised 1/26/2011<br />
  13. 13. Revised 1/26/2011<br />6<br />
  14. 14. 7<br />Revised 1/26/2011<br />
  15. 15. Revised 1/26/2011<br />8<br />
  16. 16. Attract Top Employees<br />Studies show that without benefits, outside of acquaintance or luck, a business owner cannot attract the best quality EMPLOYEES<br />Research shows small businesses need retirement benefits*<br />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. <br />By Editorial Staff <br />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. <br />*© 2007 Employee Benefit News and SourceMedia, Inc. <br />9<br />Revised 1/26/2011<br />
  17. 17. Retain Current Employees<br />If you’re not offering a retirement plan to your employees, don’t be surprised to lose them to a competitor that does!<br />Misconceptions about 401(k)s could cost Small Business Owners<br />By Lynn Gresham <br />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. . . . <br />10<br />Revised 1/26/2011<br />
  18. 18. How Do You Get Money In?<br />11<br />Revised 1/26/2011<br />
  19. 19. How Can You Maximize Your 401(k)?<br />12<br />Revised 1/26/2011<br />
  20. 20. Your 401(k) plan, easy as 1-2-3<br />3 Simple decisions to start your plan today<br /><ul><li>Eligibility
  21. 21. Money Manager
  22. 22. Optional Match/Vesting</li></ul>13<br />Revised 1/26/2011<br />
  23. 23. Possible EmployerMatching/Vesting Contributions<br />14<br />Revised 1/26/2011<br />
  24. 24. IRS/DOL<br />Money Manager<br />Participants<br />Employer<br />Payroll<br />Bank<br />Record Keeper<br />Non-Paychex 401(k) Paradigm<br />15<br />Revised 1/26/2011<br />
  25. 25. The Paychex Advantage:<br />A Seamless Flow of Contributions<br />Investment<br />Provider<br />Paychex<br />Client<br />Power of Paychex Integrated 401(k)<br />16<br />Revised 1/26/2011<br />
  26. 26. What Paychex Does For You<br /><ul><li>Required Legal Documents</li></ul>Adoption Agreement<br />Plan document<br />Summary Plan Description<br /><ul><li>Preparation of Form 5500
  27. 27. Preparation of Forms 1099-R and 945
  28. 28. Quarterly IRS nondiscrimination testing
  29. 29. Quarterly management reports
  30. 30. Quarterly participant statements
  31. 31. Daily valuation of account balances
  32. 32. Account access via participant website and automated phone system
  33. 33. Toll-free phone support
  34. 34. Loan modeling and administration
  35. 35. Roth option
  36. 36. Discretionary profit sharing plan
  37. 37. Deferral calculations for pre-tax and Roth
  38. 38. Electronic recordkeeping and fund transfer each pay period
  39. 39. Payroll integration of employee and employer contributions and census data
  40. 40. Enrollment meeting and enrollment kits
  41. 41. Automatic enrollment</li></ul>17<br />Revised 1/26/2011<br />
  42. 42. Money Manager Options<br />18<br />Revised 1/26/2011<br />
  43. 43. Small BusinessFlexible Spending Accounts<br />
  44. 44. What is a Flexible Spending Account?(FSA)<br /><ul><li>It’s part of the IRS tax code: Section 125
  45. 45. Allows employees to take certain out-of-pocket expenses on a pre-tax, rather than a post-tax basis:</li></ul>Medical<br />Dental<br />Vision<br />Over-the-counter items<br />With a Dr’s Prescription<br />Dependent Care <br />20<br />Revised 1/26/2011<br />
  46. 46. Benefits of an FSA<br /><ul><li>Employee:
  47. 47. Federal Income Tax Savings
  48. 48. Tax savings on FICA
  49. 49. State Tax Savings
  50. 50. Employer:
  51. 51. Savings on FICA tax
  52. 52. Workers’ Comp Savings (CA only)</li></ul>APPROX. 12% SAVINGS ON PAYROLL TAXES<br />APPROX. 25% - 45% SAVINGS ON EXPECTED GOODS AND SERVICES<br />21<br />Revised 1/26/2011<br />
  53. 53. FSA has 3 “buckets”<br />Plan Features<br />3) Out-of-pocket medical, dental, vision, and over-the-counter expenses<br />Insurance premiums<br />2) Dependent Care expenses<br />22<br />Revised 1/26/2011<br />
  54. 54. What Paychex Does For You<br /><ul><li>Required legal documents and plan changes
  55. 55. Regular non-discrimination testing
  56. 56. Enrollment meeting and enrollment materials
  57. 57. Payroll integration (payroll clients only)
  58. 58. Participant website and toll-free support
  59. 59. Employer and employee status reports
  60. 60. FSA Debit card
  61. 61. Weekly claim processing
  62. 62. Direct deposit of reimbursements
  63. 63. Discretionary employer contributions allowable through employer funded FSA</li></ul>23<br />Revised 1/26/2011<br />