As driven entrepreneurs on remarkable journeys, we’ve set our sights on our goals and established our businesses – either as sole proprietors or alongside partners. If you are like us, your dedication has already borne fruits, and you may have expanded your team, or are contemplating doing so. In this phase, retirement planning is huge, and not just for you, but for your employees too!

Pictured: Wealth Advisors Stephanie Vokral, CFP®, CDFA®, AIF® (Left) and Erin Eiras, CPFA®, CEPA® (Right)

It’s no secret that competitive retirement plans, among a range of other benefits, can be a secret weapon in attracting and retaining top talent. However, it’s often lamentable that small private companies, where female entrepreneurs like ourselves often thrive, lack accessible employer-sponsored retirement plans, leading to challenges in retaining valuable staff.

What’s vital for women business owners to grasp is that sponsoring a retirement plan, both for your employees and yourself, is straightforward with the help of a Wealth Advisor. We can ease any concerns you might have about funding the plans and navigating the labyrinth of processes and paperwork. Questions about compensating top executives without pushing them into higher tax brackets may even arise. But rest assured, assistance and advice are readily available, from initiating and managing retirement plans to mapping out your OWN retirement journey.

Let’s delve into the various retirement plan options tailored to meet your company’s unique needs:

  1. Qualified Plans: These encompass a myriad of retirement plan choices that can be customized to fit your specific requirements. The selection of available qualified retirement plans includes defined benefit plans, 401(k)s, Savings Incentive Match Plans for Employees (SIMPLEs), Simplified Employee Pensions (SEPs), profit-sharing plans, and money purchase plans.
    • Defined Benefit Plans: For women entrepreneurs, especially those nearing retirement, these plans can be a strategic choice, focusing on providing a defined income at retirement.
    • Defined Contribution Plans: Such as the 401(k), concentrate on contributions made by employees and employers, with retirement income hinging on the management of plan funds.
  2. Nonqualified Plans: These plans center on deferring compensation for select groups, typically highly paid executives, offering no immediate tax benefits to employers. The term “nonqualified” signifies that participants and employers don’t receive immediate tax advantages.
    • These plans can delay payment for services rendered, aiming to mitigate tax liabilities for executives during peak earning years. They often create a strong bond between the employee and the company, enhancing your chances of retaining exceptional talent.
    • Funding methods for nonqualified plans include stock options and innovative uses of life insurance, sometimes with provisions like rabbi trusts for fund segregation.

Each plan type has its unique advantages and considerations, and the choice that’s best for you hinges on your specific circumstances. The risks and rewards differ between defined benefit and defined contribution plans, making it crucial to have a clear understanding of the benefits you want to offer your employees and the funding strategies you envision for your own retirement.

As a female entrepreneur committed to success, embracing retirement planning as a cornerstone of financial health for yourself and your employees is a wise move. It’s not just about providing a valuable benefit but also securing your financial future. Learn more about Erin Eiras and her role as a Certified Business Exit Advisor® (CEPA) by clicking here.


Important Disclosures:

This information is not intended to be a substitute for specific individualized tax or legal advice. We suggest that you discuss your specific situation with a qualified tax or legal advisor. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual

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