09.13.08
Retirement on Deadline
If you are a small business owner and are entertaining the idea of setting up a retirement plan for your employees, then take note of two important upcoming dates: Oct. 1 and 15th.
Oct. 1st is the deadline by which a business must set up a Savings Incentive Match Plan for Employees (SIMPLE). If you received an extension on filing your 2007 tax returns, and want to set up a new Simplified Employee Pension (SEP) and take a deduction for 2007, then that deadline is Oct. 15th. Owners who received an extension and want to make 2007 contributions to existing SIMPLEs and SEPs need to also do so by Oct. 15th.
SIMPLEs and SEPs are popular retirement plans geared to small businesses. They are easy to create and maintain. Under a SEP, a company can deduct up to $45,000 for the 2007 tax year and $46,000 for 2008 for contributions to an employee’s account.
Employers setting up a SIMPLE can match employee contributions in a similiar manner to a 401(k). There are however more restrictions placed on SIMPLEs than on SEPs by Uncle Sam. For instance, a SIMPLE can only be created by a company with 100 employees or less.
More information is available on the IRS and Labor Department websites:
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IRS Publication 560, Retirement Plans for Small Business, on the IRS website, http://www.irs.gov.
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This Labor Department link explains the types of plans available, employer responsibilities, and annual paperwork requirements, an owner can expect for each type of plan. http://www.dol.gov/elaws/pwbaplan.htm
