Best retirement plan options for benevolent small business

[Guest DCarter]

My (S-Corp) company (11 employees, 4 of which are owners/employees) would like to know what options are available to start a retirement plan whereupon large contributions may be made by the employer. It would also be nice if employee contributions were accepted as well, but not required. We already have a SARSEP IRA to which the company contributes 3% of compensation. Most employees max their contributions to that as well. Please advise.

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Darlene

[Guest Roman]

Darlene,

My company, RTU & Associates, Inc. in Houston would be more than happy to do a study on what would be best for your company at no charge. Respond to our e-mail at rtu@pdq.net if you are interested.

Roman

[Larry M]

The "best options" for you are those which provide the closest match to (1)the desires of your company, (its management, and other employees) and (2) the ability of those involved to fund the plans, while (3) maintaining a watchful eye upon the costs of administering of the plan and the investments of your monies.

The fact that you are an S-Corp with 11 employees, four of whom are stockholders, just makes the options a little harder to find. [The easiest plan design projects have one owner who makes ALL the decisons - four owners make it a little more difficult to come to a compromise.]

You can and should meet with competent plan consultants to help you lay out your goals and your resources, determine the long term effects of various decisions and then let you decide which of the combinations of tools best suits your needs. Bear in mind, whatever course you take should allow you to change as the world around you changes.

(my prejudice suggests you hire fee for service consulting actuaries for the palnning stages - but, again, that comment may be biased by what I do.)

Qualified plans are a long term project which involve huge amounts of money - eventually. They require and demand a thorough analysis before you enter into them.

[richard]

I agree with Larry M (and in fact share many of his "biases" since our consulting actuarial practices are probably similar).

Yes, the simplest situation is one decisionmaker with a single overriding objective; for example, the largest contribution for me, and as little as possible for my employees (gee, what a concept!).

With four potential decisionmakers and conflicting goals, it is crucial that the consultant address the pros and the cons of each approach. It is the client's ultimate decision, and only though education can the client make an informed decision. It can be complex, but it is important and is worth the time.

Good luck.