Community Corner
No 401(k)? No problem.
No 401(k)? No problem.
Article Provided Courtesy of
Katie McAuliffe, Financial Advisor, Wells Fargo Advisors, LLC,
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located in Leesburg, VA.
In spite of the continued woes of the economy, small business owners are showing increased optimism about the next 12 months, according to a recent Wells Fargo / Gallup Small Business Index survey. However, despite their generally sunny outlook, many of them are still concerned they won’t have enough money to retire, or may have to retire later in life.
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Retirement plans are not limited to the popular 401(k). In fact, there are many retirement options, even for small businesses. It is critically important for small business owners to make sure they consider all their retirement options and find a solution that best suits their individual needs.
· Traditional or Roth IRA – Among the simplest and most popular ways to save for those who are self-employed, an individual retirement account (IRA) can hold a variety of investments.
· Individual 401(k) – The Individual 401(k) is worth considering for those who are self-employed or for business owners who only employ their spouse. Its relatively high contribution limits allow you to pay less in current income taxes while saving more for retirement.
· Simplified Employee Pension (SEP) IRA – With a SEP, a small business owner can contribute and deduct up to 25% of “earned income,” up to an annual maximum of $51,000 for 2013.
· Other plans, such as a Profit Sharing, SIMPLE IRA and even defined benefit plans might be an option.
In addition to potentially providing for a solid financial future, establishing a retirement plan also has certain tax advantages for a small business owner. Small business owners can take advantage of a nonrefundable tax credit that the federal government offers to encourage companies with 100 or fewer employees to establish and maintain retirement plans.
A retirement plan can also be flexible. Some plans allow for contributions to be skipped or reduced in lean years.
Wells Fargo Advisors does not provide tax or legal advice. Be sure to consult with your tax or legal advice. Be sure to consult with your tax and legal advisors before taking any action that could have tax or legal consequences.
This article was written by Wells Fargo Advisors and provided courtesy of Katie McAuliffe in Leesburg, VA at 703-777-3803.
Investments in securities and insurance products are: NOT FDIC-INSURED/NOT BANK-GUARANTEED/MAY LOSE VALUE
Wells Fargo Advisors, LLC, Member SIPC, is a registered broker-dealer and a separate non-bank affiliate of Wells Fargo & Company.
CAR Approval Number: 0413-03927
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