401(k) Retirement Plans for Individuals and Small Businesses

What is a 401(k) Retirement Plan?

A 401(k) is a qualified retirement savings plan offered to eligible employees of companies. This plan allows employees to defer taxation on a specific percentage of their income, which is then put towards retirement savings. The funds in a 401(k) grow tax-deferred, meaning you won't pay taxes on the contributions or any earnings until you withdraw the funds—typically during retirement. One of the key advantages of a 401(k) is the potential for employer contributions, where employers may match part or all of an employee's contributions, providing an additional savings boost. Employees are usually responsible for making investment selections and can benefit from direct tax savings.

Types of 401(k) Plans for Individuals and Small Businesses

There are various types of 401(k) plans available, catering to different needs. The two most common ones include employer-sponsored 401(k) plans and small business 401(k) options.

Employer Match 401(k)

In an employer match 401(k), employers match a percentage of the employee’s contributions, helping employees maximize their retirement savings. This type of plan is widely available to employees of larger companies.

Individual Retirement Plans and 401(k)

At Matt Sternkopf Financial Services, we include 401(k) savings in the retirement plans we create for you. As the individual owner of your 401(k), you will have the power to decide the percentage of your income you want to contribute to the account. You will also select the investment mix for the funds in your 401(k), which gives you flexibility and control over your retirement savings. If you have access to a 401(k) through your employer, it’s an excellent benefit and should be considered as part of your overall retirement plan strategy.

Small Business 401(k)

Small businesses can also offer 401(k) plans to their employees, and these plans can be tailored to meet the specific needs of the business. Small business owners can set up plans that allow for employee contributions and employer matches, helping them offer a competitive benefit to attract and retain talent.

Small Business and Employee 401(k) Plan Options

As a financial services provider, I also specialize in setting up 401(k) plans for small business owners who want to offer this benefit to their employees. Offering a 401(k) is a great way to provide employees with an important savings tool, while also making your business more competitive in attracting and retaining talented employees. If you're a small business owner looking to add a 401(k) option for your employees, contact me today to discuss the available plans and how we can help you set up the right solution for your business.

This material was created for educational and informational purposes only and is not intended as ERISA, tax, legal or investment advice. If you are seeking investment advice specific to your needs, such advice services must be obtained on your own separate from this educational material.