You Need Your Own Retirement Plan

By Edward Jones

As a business owner, you can’t afford to ignore your competition. You can’t afford to miss out on the trends affecting your industry. You can’t afford to alienate customers. And here’s one more item to add to the list: You can’t afford not to create a retirement plan for yourself. Of course, you might think that, one day, you’ll simply sell your business and live off the proceeds. But selling a business isn’t always simple, and there’s no guarantee you’ll receive enough to pay for a comfortable retirement – which is why you should strongly consider creat- ing a retirement plan now.
Here are some plans:
• SEP-IRA: You can contribute up to 25 percent of your compensation — as much as $56,000 in 2019 — to a SEP-IRA. Your contributions are tax deductible and your earnings grow tax- deferred until withdrawn. This plan offers you significant flexibility in making contributions for yourself and your employees. Plus, as an employer, you can generally deduct, as business expenses, any contributions you make on behalf of your plan participants.
• SIMPLE IRA: In 2019, you can put in up to $13,000 — or $16,000 if you’re 50 or older — to a SIMPLE IRA. As is the case with the SEP-IRA, your earnings grow tax deferred. You can match your employees’ contributions dollar for dollar, up to 3 percent of compensation. If you work for yourself, you can combine employee and employer contributions, so if you use the 3 percent matching rule, and you earn enough to fully match em- ployee contributions, you can put in up to $26,000 per year (or $32,000 if you’re 50 or older).

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