Trust Services
Small Business Retirement Plans
Planters Bank Trust Services can help you with your small business retirement planning. We offer several plans through our Trust Services.
SEP-IRA
A Simplified Employee Pension Plan, commonly known as a SEP-IRA, is a retirement plan specifically designed for self-employed people and small-business owners. When establishing a SEP-IRA plan for your business, you and any eligible employees establish your own separate SEP-IRA; employer contributions are then made into each eligible employee’s SEP-IRA.
Plan eligibility
You can establish a SEP-IRA if you:
- Are a sole proprietor, in a partnership, or a business owner (of either an unincorporated or incorporated business, including Subchapter S corporations);
- Earn any self-employed income by providing a service, either full-time or part-time, even if you are already covered by a retirement plan at your full-time job.
Tax advantages
Tax-deductible contributions
- Up to 25% of compensation, as much as $49,000 for the 2009 plan year.
Tax-deferred growth potential
- Any investment earnings grow tax-deferred until withdrawn.
Contribution flexibility
No annual contribution required
- Contribution percentage can vary each year, from 0% - 25% of compensation, up to $49,000 for the 2009 plan year.
- The employer must make all SEP-IRA contributions, and the same percentage of compensation must be contributed for each eligible employee (based on W-2 wages) including the employer.
SIMPLE IRA
SIMPLE IRA Plan allows you and your employees to make contributions to SIMPLE IRAs. Contributions can be made via elective deferral (employee) and matching or non-elective contributions (employer). Employer contributions are tax-deductible and employee contributions are excluded from income for federal income tax purposes.
Plan Eligibility
You can establish a SIMPLE IRA if you:
- Sole proprietorships, partnerships, limited liability corporations (LLCs), or incorporated businesses, including subchapter S corporations with 100 or fewer employees, may establish a SIMPLE IRA Plan.
- All eligible employees must be allowed to participate in the SIMPLE IRA Plan. An eligible employee is any employee who:
- Received at least $5,000 compensation from the employer during any two years, preceding the current calendar year and is reasonably expected to receive at least $5,000 in compensation from the employer in the current calendar year.
Tax Advantages
Tax-deductible contributions
- Employer contributions are tax deductible for the employer.
- Employee elective deferrals are excluded from the employee’s income for federal income tax purposes.
Tax-deferred growth potential
- Tax-deferred growth – any investment earning grow tax-deferred until withdrawn.
Contribution Flexibility
- The employer may elect a matching contribution formula or a non-elective formula of 2% of compensation for all eligible employees. If a matching formula is elected: The employer must match the employee’s elective deferrals up to 3% of the employee’s compensation for the year.
- An employer can choose different alternative for each year; the 3% match can be reduced to a minimum of 1%. The employer cannot choose a percentage less than 3% for more than 2 years during a 5 year period that ends with and includes the year for which the choice is effective or
- The employer may elect the non-elective formula of 2% of all eligible participants’ compensation. Under this formula, all eligible employees would receive this non-elective contribution whether making elective deferral contributions or not.
