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Small ret

  1. 1. Small Business Retirement Plans<br />Updated 07/29/2008<br />
  2. 2. Why Start a Retirement Program?<br /><ul><li>RETIREMENT
  3. 3. TAX- SAVINGS
  6. 6. RETAIN CURRENT EMPLOYEES</li></li></ul><li>How much will I get from Social Security?<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 />
  7. 7. Tax Savings<br /> There are two forms of tax savings:<br />ANNUAL <br />ONGOING UNTIL RETIREMENT<br /> 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. <br /> Outside of Post-Tax Annuities, no other vehicle allows your savings to grow without being taxed on a yearly basis. <br /> This power allows retirement dollars to grow at an incredible rate with time.<br />
  8. 8. Pre-Tax Growth vs Post-Tax Growth<br />*Assuming 25% tax rate, 10% rate of return, compounded only monthly<br />
  9. 9. So you don’t want to take advantage of I.R.S. section 401?<br />Questions to consider if you don’t want a forced savings plan:<br /><ul><li> Will You have the discipline to save EVERY month?
  10. 10. Will You take the time to make good investment decisions?
  11. 11. Will Your investment returns even keep pace with inflation?</li></ul>*Assuming 25% tax rate, 10% rate of return, compounded only monthly<br />
  12. 12. Cannot Predict Future, can only Prepare for it<br />In addition to the battle against inflation as you can see in the chart on the right, retirees are living longer and longer. <br />Recent studies have shown that a typical retiree can expect to live 20+ years. Therefore, one must acquire a large nest egg.<br />
  13. 13. Cannot Predict Future, can only Prepare for it<br />How Big of a Nest Egg?<br />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.<br />
  14. 14. 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 />
  15. 15. Retention of 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 />
  16. 16. Retention of Current Employees<br />Only 3 ways an owner can retain their employees:<br />1) $$$$ - Pay so much money that an employee cannot afford to leave.<br />2) ENVIRONMENT - Make the environment so great that employee doesn’t want to leave even though they can make more money elsewhere.<br />3) LOW-COST BENEFITS - For the cost of one half (1/2) of a person for health insurance, you can offer a retirement plan to your whole company.<br />
  17. 17. OK, so I think I need a Plan<br />Questions we will now answer:<br />How do I get money in a plan?<br />How much can I get in?<br />What are the 3 things I need to know to start a plan today?<br />How much is this going to cost me?<br />Will the government help pay for my plan?<br />
  18. 18. How Do You Get Money In?<br />
  19. 19. How Can You Maximize Your 401(k)?<br />Matching<br />0% to 4%<br />Profit Sharing<br />0% to 25%<br />Automatic Per Pay Period Contribution<br /> $16,500 Salary Deferral<br />(1%-96% of Pay)<br />+ $5,500 Catch up Contribution for those Age 50 and over<br />Employee<br />Funded<br />New Comparability,<br />Age Weighted<br />Optional<br /> Employer <br />Contributions<br />Combined<br />Annual Maximum up to<br />$$ 49,000 $$<br />
  20. 20. Your 401(k) plan, easy as 1-2-3<br />3 Simple Decision to Start a Plan Today<br /><ul><li>Optional Company Match
  21. 21. Vesting schedule
  22. 22. Multiple Investment Options</li></li></ul><li>Non-Broker Investment Options<br />Schwab Instl Select S&P 500<br />Pioneer Global High Yield<br />Delaware Corporate Bond<br />Vanguard Inflation-Protected Secs<br />American Century Target Maturity 2025<br />Federated Automated Cash Management Trust<br />FA Overseas<br />FA Dividend Growth<br />FA Equity Growth<br />FA Growth Opportunities<br />FA Mid Cap II<br />FA Small Cap<br />FA Balanced<br />FA Government Income<br />FA Intermediate Bond<br />FA Strategic Income<br />FA Money Market – Prime Fund<br />Columbia Acorn International<br />Quant Foreign Value<br />SSgA International Stock<br />Quant Emerging Markets<br />Vanguard Small Cap Value Index<br />Keeley Small Cap Value<br />Columbia Mid Cap Value<br />Delaware American Services<br />Yacktman<br />Columbia Marsico 21st Century<br />Janus Contrarian<br />FA Freedom Funds 2010<br />FA Freedom Funds 2015<br />FA Freedom Funds 2020<br />FA Freedom Funds 2025<br />FA Freedom Funds 2030<br />FA Freedom Funds 2035<br />FA Freedom Funds 2040<br />FA Freedom Funds 2045<br />FA Freedom Funds 2050<br />$125 per month<br />$180 per month<br /><ul><li>Each offer multiple investment choices
  23. 23. No front-end or back-end sales charges
  24. 24. 100% of deferral gets invested
  25. 25. No charge for initial “Enrollment Meeting”</li></li></ul><li>Employer Matching and Vesting Options<br />
  26. 26. IRS/DOL<br />Money Manager<br />Participants<br />Employer<br />Payroll<br />Bank<br />Record Keeper<br />Non-Paychex 401(k) Paradigm<br />
  27. 27. 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 />
  28. 28. 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>Quarterly management reports
  29. 29. Quarterly participant statements
  30. 30. Nondiscrimination reports
  31. 31. Roth contributions
  32. 32. Daily account balance updates
  33. 33. Loan Provision
  34. 34. Toll-free employee telephone access
  35. 35. Participant Website via the Internet
  36. 36. Electronic recordkeeping and fund transfer
  37. 37. Preparation of Form 5500
  38. 38. Preparation of Forms 1099-R and 945</li></li></ul><li>$1,500 Tax Credit for a New 401(k) Plan<br />The Details<br />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.<br />
  39. 39. Paychex is the #1 Provider of 401(k) Plans in America*<br />*As independently ranked by PlanSponsor Magazine, July 2008.<br />
  40. 40. Partner Investment Options<br />Fixed/Target Managed<br />Actively Managed<br />