ANDREW BECKWITH: Hello.
My name is Andrew Beckwith,
and I work for
the Internal Revenue Service.
Did you know that setting up
a retirement plan
has many benefits for you,
your business,
and your employees?
First, offering
a retirement plan
helps you attract and retain
good employees,
avoiding the high cost of hiring
and training new workers.
Second, the plan helps everyone
save money on taxes.
Your contributions to the plan
are usually deductible
right away,
and your employees don´t pay tax
on the money
until they take withdrawals,
usually in retirement.
Third, your assets grow
tax-deferred
in a retirement plan.
These compounded earnings
allow small, regular
contributions to grow over time
to significant
retirement savings.
And last, your business
may be eligible
for valuable tax credits
or incentives
when you start
a new retirement plan.
You can choose from many types
of retirement plans,
including some that are easy
to set up and operate.
For example, plans that use
individual retirement accounts
for each employee
can be good, low-cost options.
A Savings Incentive Match Plan
for employees,
or SIMPLE IRA plan,
allows employees to defer part
of their salary in IRAs.
You, the employer,
must also contribute
either a 3% match
or 2% of compensation
to each employee´s account.
A Simplified Employee Pension,
or SEP, Plan
only allows contributions
by the employer
with no employee
salary deferrals.
The employer contributes
up to 25% of compensation
to each employee´s SEP IRA,
and each employee must receive
the same percentage
of compensation.
As an alternative
to these plans,
you can also contribute directly
to employees´ IRAs
using a payroll deduction
arrangement.
Employees decide how much
they want to contribute
to their own Traditional
or ROTH IRAs.
The IRS has many resources
on our website
to help you choose a plan
and keep it running smoothly.
Just visit IRS.gov/ep
and click on
"Choosing a retirement plan."
Thank you.