401Ks for the Smallest of Small Businesses

I run a small electronics store where I employ less than 5 people. Is my business too small for a 401k? – Joan Mello, Arkansas.

Actually, a 401K plan is meant for businesses of any size. You can even open a 401K retirement plan if your small business only employs you and your spouse. This kind of 401K is called a solo plan. But for your ‘less than five employees’ electronics store, you can open a regular 401K plan. As yours will not be a solo plan, you also qualify for the $500 IRS tax credit for the first three years. This credit is available for all businesses that employ less than 100 people and have costs exceeding $1000.

You can set up a profit sharing or contribution match system to get some more tax advantages. All your contributions to your employee’s 401K plan are deductible for tax purposes.

Setting up and administering your 401K plan has become really easy now. There are many reliable software suites, including those from the likes of http://401keasyonline.com/, which offer comprehensive solutions for just this purpose. Simply sign up with them online, and you can set up and manage your 401K plan online or choose a PC based suite in line with your preferences. No matter which one you opt for, all you need to do is spend a few minutes on payday for each of your five employees, updating their 401k plan records and you are done. The software takes care of the record keeping and managing tasks. Choose one of these options and set up a 401K plan for your electronics store right away to start saving on tax.

About Elliot Earl, Director, Pension Trade Association
Director, Pension Trade Association Founded in 1982, the Pension Trade Association [California Domestic Nonprofit Corporation #C1629080] is dedicated to helping workers save for their retirement through expanded coverage of 401k -type defined contribution pension plans.

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