How’s Your Retirement Plan Doing?

If you have a qualified retirement plan for your business, determine whether your plan is meeting your objectives and complying with the law. If you don’t yet have a plan, consider adopting one now.

Is your current plan the best one for you?

There are several types of retirement plans that a small business can use; the one to choose depends on your personal situation.

Factors to consider in plan selection (or in changing from an existing plan to a new one) include:

  1. Profitability of the business (how much can you afford to put into the plan each year).
  2. Number of employees (which affects the cost of company contributions and whether to use a plan that places the contribution on owners entirely or primarily on your staff).
  3. The number of years to your retirement (how anxious you are to sock away as much as you can for your own retirement).

Review your plan options in IRS Publication 560, Retirement Plans for Small Business. Talk things over with your tax/financial advisor or consult with a retirement plan expert for guidance in choosing a better plan and terminating your existing one.

Are your investment choices satisfactory?

The stock market remains volatile and interest rates are at historic lows, which may make your returns look anemic. In view of these factors, do your plan’s investment choices continue to meet your needs? Work with a financial advisor to realign your plan portfolio.

Is your plan in compliance with tax laws?

Tax laws on retirement plans have changed over the past several years, particularly since the Pension Protection Act of 2006. Are you up to date? Use a checklist for your particular type of plan (e.g., SEPs, 401(k)s) to see whether you’re in compliance.

If you discover problems (e.g., you’re not covering all of the employees you should), you may be able to correct the problems with little or no penalties or other IRS charges using the Employee Plans Compliance Resolution System (EPCRS). Talk to your tax advisor about this option if needed.

You can stay up-to-date on future changes and other retirement plan developments by subscribing to Retirement News for Employers. This free quarterly newsletter reports on plan law changes, new forms, and other plan-related items you’ll want to know about.


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