Retirement planning

Choosing the right retirement plan begins with understanding the needs of your business. At The Harding Group, we’re committed to building solid relationships with our clients based on a thorough understanding of your business and personal finances. Armed with this knowledge, we can walk you through all the retirement plans available to you and help you select the optimal plan to support your business.

We work with a number of trusted financial advisors and third party administrators that can help you establish the appropriate plan and ensure you’re in compliance.

traditional ira:

The traditional IRA is a tax-deferred plan designed for individuals. Contributions are made with before-tax money, meaning that IRA contributions are subtracted from income on the tax return, but withdrawals are taxable.

roth ira:

Contributions to a Roth IRA are made with after-tax money, so they don’t help your current year tax liability at all. But money in a Roth grows tax free and is tax free when it’s withdrawn. It’s a great plan for young taxpayers who are not yet in high tax brackets.

sep ira:

The SEP is a great choice for procrastinators because the deadline to open it is September 15th of the following year. A SEP plan requires the business to make a profit sharing contribution for all eligible employees at the same percentage. That percentage can change each year and is currently capped at 25%. The SEP is a good choice for a business where there are only a small number of employees (if any) other than the owner. (It gets very expensive when there are a lot of eligible employees.)

For the SEP plan, only the employer makes a contribution and it’s fully deductible to the business and not subject to FICA.

The SEP plan is only available to businesses and sole proprietors (not individuals).

simple ira:

The Simple plan is a very good choice for a lot of small businesses because it allows a fairly generous contribution ($12.5 – $15.5k) that’s not limited by a percentage of earnings. It allows employees to make contributions, but it also requires the business to make contributions. The employer can either (A) match the employee contribution up to 3%* of the gross wages each pay period of (B) make a 2% contribution for each eligible employee each pay period, regardless of whether or not they contribute. *The match can be reduced as low as 1% in any two out of five years. All retirement plans have penalties for early withdrawals, but there are extra penalties for early withdrawals from Simple IRAs.

The employee contributions are subject to FICA but not subject to withholding. The employer match is fully deductible and not subject to FICA.

The Simple plan is only available to businesses and sole proprietors (not individuals).

401-k:

The 401-K plan is a good plan for a business (or sole proprietorship) where the business owner wants to invest and shelter more than the Simple allows. It allows employees to invest, and it also allows the business the option of making a profit sharing contribution. The profit sharing contribution can be subject to vesting, if desired. For safe harbor plans (which have lower administrative costs) the business is required to match employee contributions up to at least 4% of the gross wages each pay period. Administrative fees typically run from $500 – $1500 per year, depending on the complexity of the plan and the investment options available.

The employee contributions are subject to FICA but not federal or state withholding, while the employer profit sharing contributions are fully deductible and not subject to FICA. There’s also the option to allow the Roth feature, which allows employees to contribute after tax dollars that will grow tax free and be withdrawn tax free.

A 401-K plan can only be established for a business or sole proprietorship (not individuals).