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investment vehicles for small business owners
Old 03-01-2007, 01:56 PM   #1
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investment vehicles for small business owners

Hi all,

A friend of a friend has asked for some investment advice (http://early-retirement.org/forums/i...?topic=12600.0).

He is a small business owner. Can someone point me to the best links on line for educating this person on investment vehicles (ie. tax deferred options) available to business owners?

Much appreciated
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(49, married; DH 53. I am fully retired as of 2015 (well ok, I still work part-time but only because I love the job and have complete freedom to call off if I want to travel with hubby for work), DH hopes to fully retire 2018 when he turns 55 to access 401K penalty-free...although he may decide to do part-time consulting)
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Re: investment vehicles for small business owners
Old 03-01-2007, 02:32 PM   #2
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Re: investment vehicles for small business owners

SEP IRA. Depending on income, you can put like $40K per year in. Seek Tax advisor.
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Re: investment vehicles for small business owners
Old 03-01-2007, 02:34 PM   #3
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Re: investment vehicles for small business owners

Almost all of the large online brokerages, (say..Fidelity, Schwab, Vanguard, T. Rowe Price) offer small business plans.

Here's the link to Fideltiy: http://personal.fidelity.com/product....cvsr?refhp=cp

they give a good outline or overview of the types of plans, etc.
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Re: investment vehicles for small business owners
Old 03-01-2007, 02:53 PM   #4
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Re: investment vehicles for small business owners

Simple Girl, how many employees?

Sarah
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Re: investment vehicles for small business owners
Old 03-01-2007, 03:31 PM   #5
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Re: investment vehicles for small business owners

Quote:
Originally Posted by mclesters
Simple Girl, how many employees?

Sarah
And what is their compensation? If you have 3-4 partners that make big money, and a bunch of employees making a lot less, it will be tough to get the owners to do a SEP.

A LOT of what I see is SIMPLE IRA with discretionary profit sharing if there's a large difference in pay............
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Re: investment vehicles for small business owners
Old 03-01-2007, 05:15 PM   #6
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Re: investment vehicles for small business owners

If he doesn't mind reading through IRS publications:

Pub 590 All About IRAs
Pub 3998 Choosing a retirement plan for a small business
Pub 4222 401(k) plans for business
Pub 4224 Retirement Plan Corrections
Pub 4284 SIMPLE IRA Checklist
Pub 4285 SEP Checklist
Pub 4334 SIMPLE IRA for Small Business
Pub 4460 Retirement Plan Product Navigator
Pub 560 Retirement Plans for Small Business


If he has either no employees, or immediate family members as other employees, I can recommend the name of a benefits consultant who can set up a Defined Benefit Pension plan for him for a very reasonable cost ($1,500 setup fee, annual fee of about $1,000). This could allow him to sock away HUGE amounts of money, depending on his income and age (we're talking possibly well in excess of $100,000/year tax-deferred). It has some drawbacks, but it all depends on his age, his income, and how much he's looking to sock away. send me a private message for the contact info.

Does he have a CPA/Accountant do his taxes? If so, he should be able to suggest the optimal retirement account setup based on income/age/other employees (then again, my dad's accountant never said two words about the DBP until I did my own research and brought it up).


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Re: investment vehicles for small business owners
Old 03-07-2007, 10:53 AM   #7
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Re: investment vehicles for small business owners

Thanks for the info thus far. I have just found out that he is the sole owner and sole employee.

Also, I don't know how much this guy makes, but I don't think it's huge $. It might be a struggle for him to put even a few hundred $ away a month. Given that info, any suggestions on the best type of investment vehicle for him? From the initial reading I have done (thanks for the Fidelity link), it looks like a sep-IRA may be the best fit. Feedback? What if he ends up hiring an employee? Will he have to contribute for that employee?

I realize this may not be enough info for you all to give advice. I'm working with limited info, too. Even if you just ask me questions, that may help point him in the right direction. I don't know anything about small business 401k's, etc., although I'm trying to learn a little b/c I'd like to help this guy out, if I can. He's starting late, doesn't have a lot of money to work with, and knows absolutely nothing about investing. So any tidbits I can pass along are better than him doing nothing.


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(49, married; DH 53. I am fully retired as of 2015 (well ok, I still work part-time but only because I love the job and have complete freedom to call off if I want to travel with hubby for work), DH hopes to fully retire 2018 when he turns 55 to access 401K penalty-free...although he may decide to do part-time consulting)
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