We can help you decide which type of retirement plan is the most cost-effective and easy to administer for your situation, and then recommend service providers. We will also assist you in the enrollment and employee education process.

• Contribution flexibility and limits.
• The level of administration involved in the plan. 
• Vesting schedules. 

Working with your tax and legal advisors, here are some of the plans Pinnacle can help you explore:

SEP-IRAs. A Simplified Employee Pension (SEP) allows you to make contributions toward your own and your employees' retirement through a relatively uncomplicated plan. Under a SEP, you make contributions to a Traditional IRA set up for each eligible employee. SEP-IRAs are owned and controlled by employees, but they cannot make their own contributions. Employers receive a tax deduction for contributions to the plan. Employees do not pay taxes on the contributions, but are taxed when they receive a distribution from the SEP IRA.

Simple IRAs. A Savings Incentive Match Plan for Employees (SIMPLE) enables eligible employees to contribute part of their pre-tax compensation to a Traditional IRA set up for them within the plan and defer paying tax on those funds until they receive a distribution from the plan. This contribution is called an elective deferral or salary reduction contribution. Employers receive a tax-deduction for the contributions they must make to the SIMPLE IRA plan. Employer contributions are in the form of either matching or non-elective contributions.

401(k) Plans. 401(k) plans are a popular type of qualified defined contribution retirement plan because they allow employees to save more, with tax advantages. Employees defer part of their compensation through a contribution to the plan. Employers can make matching contributions, non-elective contributions or profit-sharing contributions. While they are popular because of their flexibility, 401(k)s are more costly to administer and require more oversight from the employer than IRA-based plans. 

Profit-Sharing or Stock-Bonus Plans. Both are defined contribution plans. Employers can use a profit-sharing plan to share profits from the business with employees. Profit-sharing contributions are discretionary, which means an employer does not have to contribute to the plan every year. A stock-bonus plan is a type of profit sharing in which the corporation makes contributions and distributions with its own stock. Stock-bonus plans, however, are not available to sole proprietorships and partnerships. Either type of plan may feature a 401(k) plan.

Employee Stock Ownership Plans (ESOPs). These are a type of defined contribution plan (most often a stock bonus) that can qualify for favorable tax treatment. Funds in an ESOP must be invested primarily in company stock. Funds can come from the company's contributions of cash, loans to the ESOP or a defined contribution plan converted to an ESOP. The funds are held in trust for the benefit of employees and their beneficiaries and are used to buy employer stock from shareholders or from the company itself. When participants retire or leave the company, they receive the vested interest in the ESOP in the form of cash, or in some cases, company stock.

Defined Benefit Plans. A defined benefit plan is a qualified retirement plan in which the employer provides employees with retirement benefits according to a formula. Pinnacle works with all configurations of defined benefit plans. We specialize in developing 412(i) defined benefit plans, which the business funds by purchasing annuities and life insurance for the employees (including owner employees) on a tax-deductible basis*. Because 412(i) plans are exempt from the minimum funding requirements usually applicable to traditional defined benefit plans, the administration of a 412(i) plan is often simpler than that of a traditional defined benefit plan.

* An economic benefit cost is taxable to employees. 

It may be difficult to understand all of the options available for retirement plans. For more information on how Pinnacle can help you choose the plan best suited for your company, please contact us.