Retirement

Ok....this is off the wall....kinda but not really. I am a electrical contractor. I have 3 guys plus myself employed. They all make good wages for their skill level and abilities. I am looking and wanting to offer them a retirement plan of some type....but not sure how to do this....Id like it to be/have a portion of it supported by themselves as well as from the company, I have no bones about providing this to them, and paying for it, just feel they should be doing some as well.

Now....the tricky part....how to set this up. Id rather not be paying payroll taxes on their retirement funds...id rather give the employees more money! Also, how to set this up so that it is "protected" and cant be cashed out....Out of three...there is one who wouldnt have a extra penny in his account if he could get his paws on it....

Granted, his financial planning (rather complete and utter lack thereof) is not my problem....but I would like to set this up so these guys have something down the line.

IDEAS????

Hey! I've been looking for you. We're gonna be down at the lake Sunday and Monday. We're going down for the eclipse. You aren't by any chance going this weekend are you? As far as I know,we're still planning to get together with Lee Little and his wife Monday.

When I worked as a contractor my boss was able to put 15% of my salary into an "SEP IRA" without either of us paying taxes on it. Taxes are due like a traditional IRA when I withdraw. That was the best deal for him about 20 years ago, but if I google "SEP IRA" I see that it's still a thing. You should check into that. He was a smart guy and I'm sure he did it the best possible way for his situation (maybe 5-10 employees?). Not sure if something better is available now that Roth IRAs are a option.

Financial advisor. Check with your trade association or union (gasp) for recommendations, or similar-sized plumbers, HVAC, etc.

A long ago financial advisor advised an SEP IRA for employees. Retirement funds are very highly government regulated.

RRLUND....We are heading down on the 24th, through the 27th I think....probably gonna miss you it sounds like, how long are you going to be there for?

My last employer would put money into my retirement fund if I contributed too.

I took an early buyout. Employer also put 40% of my last years salary into a 410k which I didn't have to pay taxes on until I withdrew money.

Not sure if this was a tax advantage for my employer. My last employer was happy to get rid of their older workers who where at the top of the pay scale. It was a win win for both of us. They also paid for my health insurance for 10 years until I could sign up for Medicare.

Three years ago my boy's new employer really wanted his IT security skills. They put $500 a week into his 401K. Again not sure how much a tax advantage it is for his employer, but it's an advantage for my boy, no taxes until he retires and starts withdrawing.

So instead of offering your employees pay increases, which you have to match their SS, putting money into their 401k is an alternative and you to save on their SS contribution.
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If you open your e mail I can give you a Fiduciary financial advisor that has a plan that utilizes Exchange traded funds (1 tenth the cost of traditional) in a 401 K format. I don't want to start a war. Earl. He is one of the top 5 independent advisors in the country and 5000 is the minimum account he will start with. The lowest in the business. He has offices all across the country and they all follow strict rules when handling his methodology. Earl

I don't know. If they are going to be required to support part of it then their weekly take home pay will be less then it is now. You and they are already paying in to a retirement account. It's called Social Security. I think they need the bigger paycheck now when they are raising family and paying for house. I think I would just give them a raise and be done with it. With that raise you will be paying more into their social security AND they will have more take home pay. Seems like a win win. Just my thoughts.

Heading home Tuesday morning.........if we go at all. The wife just hit some dumazz who ran a stop sign and our car isn't drivable. I have to call Enterprise in the morning.

I thought a sep was for self employed only,and a very good way to put lots of money back for retirement.

I have something called SImple IRA offered to my employees. If they contribute, I match their contribution with no payroll tax up to a certain percentage. You'd be surprised how many don't take it, because they want their money now, and don't want to put any away.

Looked into this several years ago when I had 3 - 5 employees. An IRA was the way to go but as mentioned none wanted it. Cut into beer, 4 wheeler, bass boat, new truck, etc money.

I have a 401K, retired a number of years ago and I am grateful that I saved through the 401k however there is always a catch where the government is involved. I actually lost 5.5% of my investment last year, yet had to cash in $10,000 to pay my income tax on the mandtory withdrawl.

I think its a lot better to invest in the roth ira than the 401k market. Money earnings early in ife are generally lower than when you get older so it will actually save you on taxes. Yes you will pay taxes up front but when you start cashing it in it is tax free. yOU can start drawing it at age 55 with some stipulations or pay a heavy penalty if withdrawn early. with the 5000 limit of deposit for a single person and if you find an honest stock broker you can trust it will make you a very nice retirement nest egg. a lot will depend on your age but the stock market will give you a lot more return. you probably could get 4 percent fixed interest now but not at any bank. saving money with a bank is costing you a lot of money if your young. so to answer your question I would go talk to an investment guy about it. keep in mind you might want to sort of protect your self and put a time limit on it so your employee has to work so long for them to get the money. a lawyer might help also. just saying

You really need to talk to your CPA, assuming you don't do your own taxes for your business. If you do find a good CPA and get their advice. The best plan depends on your business as well as the law.

What??? Paid for your health insurance for 10 years?????
Right.....

Certified Financial Advisor.CM

Yes, paid for my single health insurance for 10 years, until I was 65 on medicare. My total buyout package $75k, that's 401K + 10 years insurance.

I retired at 55 on pension. Started SS at 66.

Only wish I could have retired the day I graduated college.

504 If you own a company and contribute to a SEP IRA for yourself you are required to offer a SEP IRA to any employee that has been under your employment over three years the same plan as yours based on the same percent that you put in for yourself. The employee doesn't have to accept it though but I cant imagine why they would turn down free money.

One thing I haven't seen mentioned is a retirement plan through a trade association. I know some of the engineering firms I have worked for set up 401K accounts through ACEC (American Consulting Engineers Council). For electricians, I know about NECA, but I am more familiar with them from a standards standpoint. I do not know what they offer for business support for electrical contractors.

Go ahead and check into it with your accountant. Then I'd also offer your employees a vote. Do they want the retirement ? Would a raise now be better ? Or unless you do now would they prefer their health care be paid for ?
Where I work they offer a decent 401K match. Trouble is I don't make a lot of money and I have to use about all I make to get by. I don't put money in there. I try and save some for the unexpected things like appliances going bad ,house repairs, car repairs and medical bills. If I put the extra in there now I'd not have it avail. when I need it.
Believe me I don't live a very lavish lifestyle either. I'd challenge anyone to live on what I make and have what I have.

(quoted from post at 00:39:02 08/17/17) I don't know. If they are going to be required to support part of it then their weekly take home pay will be less then it is now. You and they are already paying in to a retirement account. It's called Social Security. I think they need the bigger paycheck now when they are raising family and paying for house. I think I would just give them a raise and be done with it. With that raise you will be paying more into their social security AND they will have more take home pay. Seems like a win win. Just my thoughts.

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I have to heartily disagree. NOW is the time they should be saving and taking advantage of compound growth. I wish I'd started contributing more from the start in my 401k, I'd be much better off now as I near retirement and wouldn't have had the money to waste in my younger years.

To the OP, get with a good financial advisor, individual or company, to set up a program for the employees, and strongly encourage them to sign up and start contributing on a regular basis.

(quoted from post at 03:41:42 08/17/17) What??? Paid for your health insurance for 10 years?????
Right.....

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My employer subsidizes our retirement health insurance. If I retire early (starting at age 55) with my years of service (35+) I pay the same as any other employee that is still working until I'm Medicare eligible then it moves to a fixed amount subsidy per month for a Medicare Supplement policy. Newer employees don't get this now, no retirement health help at all.

I worked for a company some years ago and they had worked with a Certified Financial Advisor or Planner to set up a retirement plan. That is where I think you need to start, and probably have your accountant on the same page with this, too. I suspect it will take some time. If I remember correctly, that company I had worked for 22 years ago had the plan set up with IDS Financial Services and it was structured as an Individual Retirement Account. That plan required a minimum of $50 per month, which was matched dollar for dollar by the employer. We also had the option of going to $100, which was also matched dollar for dollar by the employer. When I left that company, my new employer had a retirement plan structured as a 401k plan, which also had minimum mandatory contributions from the employer with up to a maximum amount matched. I believe the minimum was 2.5 percent of gross earnings of the employee, matched up to that amount by the employer. The employee could contribute additional monies to that plan, too. I think the maximum may have been up to 14 percent, and I suspect that may have been the maximum allowed through the tax code. The company did also have a profit sharing provision with the employees, too, but that is an entirely different topic. A career move drastically changed my full time occupation and retirement funding about 15 years ago. IRA's and 401k plans are still in place, but there are now Roth forms of those plans available today. These are retirement plan tools that have their respective advantages over the traditional plans. I converted a traditional IRA to a Roth IRA a few years ago. I suspect with just you and 3 employees, this might be easier and simpler through the IRA structure versus a 401k plan. The firm you work with should be able to help you with this, in determining what might fit you, your company's, and your employee needs best. There will be management fees on these types of accounts. Including your employees in on this is also important, and I suspect the financial planner would also meet with you and your employees as a group to help in setting this up and providing information to make better decisions. I was pretty fortunate that I started contributing towards retirement when I managed to get settled into career after finishing my college education in 1989, and have had some good people to talk with through my various employers over most of my working years. In the past 15 years, I have been fortunate to work with a representative through a life insurance company, a couple representatives through my employer's menu of options on various insurance and retirement savings programs, as well as a certified financial advisor through Principal. Our needs change over time, particularly once we are married, then have children, career changes, and as we grow older, all recognized as life changing events. I commend you for at least looking into this sort of benefit for your employees. Not all businesses of your size are likely to take this sort of action. Good luck and I hope what I have shared is of some use to you.

(quoted from post at 18:39:02 08/16/17) I don't know. If they are going to be required to support part of it then their weekly take home pay will be less then it is now. You and they are already paying in to a retirement account. It's called Social Security. I think they need the bigger paycheck now when they are raising family and paying for house. I think I would just give them a raise and be done with it. With that raise you will be paying more into their social security AND they will have more take home pay. Seems like a win win. Just my thoughts.

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That is exactly what s wrong. If you cant or wont save for yourself, you deserve the very minimal ss plan. And it gets worse everyday as CONGRESS continues to eat it up. At first, it was NOT taxed... Now it is. At first, it would perpetuate itself forever, now, with CONGRESS adding in all the other benefits, it will not. At first, there were very generous cost of living raises that made if more reasonable, now its not livable and only minimal cost of living based on a newer index that will not support you. If you cant or wont take care of your retirement, you will be living on $1500 a month. And if you cant take care of your retirement, sadly, you probably dont have a paid off home, paid off car, savings, or emergency plan so yes.. you will barely live, destitute. The government has broken EVERY promise on the SS plan so far. If you dont take care of yourself and spouse, no one else will. Back to eating cat food and finding Doctors (who barely speak english) who will take medicare.

I linked up my email on Classic. Send me an email with you email addy so I can get in touch with you before we go next time if you would. I'd like to get together with you when we're down there some time.

It looks like you were able to obtain quite a number of comments and ideas. Hope you obtained at least some of what you were looking for. I will add just a few closing thoughts on this topic. There certainly are some strong opinions out there. Some may come across as being rather critical of today's younger workers. I feel I can see both sides. You probably know your employees quite well. You probably have some bit of insight as to the lifestyles they lead. I DO feel there are more people living beyond their means, than living within or below their means. I think if you find the right company and financial planner to work with, he/she probably will be able to tailor the right message to your 3 employees to help them see this as a priority. Incentives to promote savings will help, too. The right financial planner can probably help out in other ways, too, by potentially offering an annual review of savings with each employee, along with helping to set goals and targets for them. He/she may also be able to offer other financial tools to all of you, such as long-term care policies, cancer policies, life insurance policies, estate planning, power of attorney needs, living wills and trusts, multiple types of investment plans, etc. I had a friend of mine who served on some various corporate boards in his career. He worked with a few companies where the owners were getting rather advanced in their ages, had no heirs who were interested in working for the company, and assisted the owners in constructing a ESOP, or Employee Stock Ownership Program, so the employees over a period of time eventually bought and owned the company. This is probably not something you have in mind, but I share this as a way of making a point about exploring options and making your company good for both you and your employees. The needs, wants, and goals of a 20 year old employee are going to be different than those of a 55 year old employee.

Sounds like you are self employed and are concerned about your employees' well being. I ran a business for 35 years with up to 14 employees and found that a SIMPLE IRA met my needs and the employees' best. Why? My object was to put away as much as I could for retirement and to encourage the staff to do the same. A SIMPLE plan gives them an incentive: you determine how much you can afford to put away for yourself each year up to $12,500 a year and up to 3% of salary as the employer's match (paid to yourself) You also match whatever each employee puts away by the same percentage. In a bad year, you might not be able to save up to the maximum, and not be able to match; other years you save the maximum and put that extra 3% in for yourself and the employee. Either way, you and your employees decide how much to save or if they wanted to do it at all (about 1/2 of mind did), and you decide what % you can afford to match. It has minimal reporting requirements and doesn't cost anything to set up (contrast with a 401(k) which has high carrying costs to the employer. You can get one administered by a bank, trust co or firm like Vanguard or Fidelity which is what I did. Probably would make sense to talk to your accountant or other financial advisor. Mine suggested this twenty years ago instead of my plain IRA, and with what I contributed and a rising stock market am getting about double from the IRA what I draw from Social Security. Obviously you do better if you force yourself to save each year instead of buying a boat..or tractor.