An employer sponsored retirement savings plan is a win/win option offering tax benefits and security to both the business owner and employee with a large array of options. Here are the top three benefits for establishing a 401(k) for your company:
With a 401(k), your contributions are tax deferred meaning you won’t pay any taxes on that money until you take withdrawals which will, ideally, be after retirement when you are likely to fall into a lower tax bracket. Also, many employers will offer company matching up to a certain percentage – this is free money that you do not want to miss out on!
You may be worried about unforeseen expenses and the illiquidity of a 401(k). This type of retirement plan is a bit more flexible than an Individual Retirement Account in that you can actually take a loan against your vested balance. In this way, you can still access your funds and pay back the loan without incurring tax penalties for early withdrawals.
According to a recent report [Help in Defined Contribution Plans: 2006-2012 by Financial Engines, Inc.] participants in 401(k) plans who enlist the help of an investment advisor earn an average of 3.32% higher returns annually than those who opt to invest on their own. With Hillspring Financial, Inc. we will help you assess your personal risk budget so you can invest in a model managed and monitored by trusted investment advisors that has been created specifically for people like you.
In the end, it is your money and you have your own goals. Hillspring Financial, Inc. is here to help you meet those goals now and through retirement.