Retirement Plans

Discussion in 'Business Operations' started by sodzilla, Mar 2, 2007.

  1. sodzilla

    sodzilla LawnSite Member
    Messages: 219

    Hi everyone,

    It's been a while since I've been on Lawn site. I got out of the business a couple years ago. I am currently working as a Financial Advisor for a major US Firm. I remember from back in the day of owning my lawn business about being concerned with not having a retirement plan. I was not aware at the time of the plans available to small business owners. Since I am now in that type of business I thought I would post to let you guys know of some plan available. I am in no way doing this to get business for myself. Just giving info to help you. If this is of interest to you I recommend you call a local advisor to set up a plan.

    A SEP IRA is Simplified Employee Pension Plan. Perfect for self employed individual with no employees. you can tax defer up to 25% of your income up to $44,000 a year into your retirement plan. If you have employees you need to contribute the same % in their account as you do your own.

    A Simple IRA. employees make a contribution and the employer can match the contribution up to 3%

    These two plan are inexpensive and very simple to set up. They can be started with as little as $25-50.00 depending on investment options.

    There are also Safe Harbor 401k's, Single 401k's, regular 401k's, profit sharing and other plans that are more involved. Talked to your local Financial Advisor for info on these.

    non-business plans

    Traditional IRA. contribute up to $4,000 a year. $5,000 a year if your 50 years of age or older. Contributions are tax deductible. When you retire withdrawals are tax at your personal income tax rate. If you withdraw before age 59 1/2 you pay taxes plus a 10% penalty on earnings.

    ROTH IRA. contribute up to $4,000 a years. $5,000 a year if your 50 years of age or older. After tax contribution (no tax deduction). when you retire withdrawals are TAX FREE. If you withdraw before age 59 1/2 a 10% penalty on earnings.

    These also can be started with as little as $25-$50.00 a month.

    I hope this helps

  2. jsf343

    jsf343 LawnSite Bronze Member
    Messages: 1,786

    Great info Brian, where or who do you go through to get these plans for a good price?
  3. sodzilla

    sodzilla LawnSite Member
    Messages: 219


    Any investment company can set up a plan. such as Edward Jones, AG Edwards, Merril Lynch and so on. My firm has a $40 annual fee for an IRA other firms will charge about the same. In these plans you can invest in stocks, bonds, Mutual Funds, CD's, ect. Most people use Mutual Funds. Depending on the fund family you use you can start with as little as $25-$50. some funds require a $250 first investment. Some are more. It just depends on what Mutual Funds you use.

  4. mastercare

    mastercare LawnSite Senior Member
    Messages: 289

    You can get this any of these programs from just about any financial planning firm. But, be aware that there are different ways that insurance/investment reps get paid. Some are commission based, and some are fee based. Some get both.

    A typical fee based planner will sell you an investment (Mutual fund) and charge you an annual "advisory fee" of 1-2% for them to "watch" your account. Their incentive is to do well for you, because it increases their own pay. Be aware that some of these advisors are getting this percentage PLUS a commission. If they are not recieving commisions, they are probably steering you into a no-load fund (no sales charges). Please understand that this "no-load" fund indeed has no front or back end charges, but the annual fees (management, 12-b1 fees etc.) are typically higher than if you had gone with a fund that charges a sales charge.

    Or you can go with a non-fee based planner. This person can typically get you a fund with lower operating expenses, potentially giving you a larger return. You may need to pay a sales charge (depending on which class of shares you buy) but if you're keeping this fund for years and years, it may be a wiser choice to pay a fee up front, and recieve lower annual fees. This type of rep typically is commission based only.

    You'll quickly learn that just about any fund you can buy through a fee based planner can also be purchased through a non-fee based, which means you can get the same investment, without paying your investment rep twice!

    I appreciate the information this member has offered. I too am in the financial planning business (when I'm not running my business) and feel that there should be more open discussions on this website about finances. It has always amazed me that some people are EXCELLENT at what they do for a living, but have no idea what to do with their paycheck when they get home!

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