Help Your Employees Save for Retirement

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By Bennett Whitlock, CRPC®, Private Wealth Advisor

As a small business owner, one of the greatest benefits you can provide to your employees is a way for them to save for their financial future. You have flexibility in choosing a plan or combination of plans that work for your business. Broad categories include:

Defined benefit plans

A defined benefit plan, such as a traditional pension plan to which you to make annual contributions, can be adjusted each year. Some plans feature the option to automatically increase annually, allowing you to reward employee loyalty. The plan pays out a specified benefit to retired employees.

Defined contribution plans

A defined contribution plan allows the employee, the employer or both to contribute to an individual account for the employee. A 401(k), the most common defined contribution plan, allows the employee and employer to make consistent, tax-deferred contributions. Participants choose investments which have the potential to grow tax-deferred. Employers have flexibility to establish vesting schedules or options, such as a Roth 401(k), funded by after-tax contributions but with the potential to provide for tax-free withdrawals in retirement. Although just as with pre-tax contributions, a Roth 401(K) comes with required minimum distributions.


There are two types of individual retirement accounts (IRAs), which allow you to make tax-deferred contributions. One option, a Simplified Employee Pension (SEP) IRA, is one of the easiest and least costly plans to create. 100 percent of the contributions are made by the employer and are immediately vested for the employee. It’s not possible to set up a Roth version or to offer loan provisions.

A SIMPLE IRA is a second option you can use if your business has less than 100 employees. Like a SEP, it’s easy to establish and administer, and the plan requires employers to match the employee’s contributions.

Don’t forget about your own retirement

It’s important to understand all of your retirement options. While you may be hoping that the proceeds from the future sale of your business will provide for your retirement, you could be putting your future at risk if you’re not saving in another vehicle. Consider working with a financial advisor who specializes in small business retirement plans. A professional can help you make the best choice for you, your employees and your business.

Bennett Whitlock, CRPC ®, is a private wealth advisor and managing director with Whitlock Wealth Management, a franchise of Ameriprise Financial Services, Inc. Learn more at or call 703-492-7732. 


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