Small business owner 401k

[room7]

I own a corporation. The corporation owns 3 other corporations each with its own fast food restaurants. I would like to setup a 401k for myself and a few of my managers. I wanted to know if my understanding so far is right.

1) For myself I will setup a Self-employment 401k
-I could contribute ~$50k
2) For my managers I will setup a 401k Profit Sharing system
-I could deduct up to 25% of their annual compensation (~$50k max)
-contribution could be adjusted based on profits (no contribution required)

The goal is to have as much net tax savings as possible. Where should I go to set this up? I see INGDirect offers a good program

 

[Animorph]

1) a Solo or individual 401k? You can't have any employees (other than family) for that one.

2) I don't think a 401k "for some of my managers" is allowed, if that excludes other employees.

If the top corporation is only you and your managers you might be able to set up one 401k for all. There are all sorts of restrictions related to treatment of highly paid employees and "regular" emloyees. It's not usually something you just sign up for online at Fidelity.

 

[braumeister]

Also, you'd probably get more responses if you put a question like this in a more appropriate section.

 

[MichaelB]

room7, welcome to the board. I'll move this to the FIRE and Money forum, and you might want to stop by here and tell us about yourself.

 

[Texas Proud]

Not that knowledgeable in what you are proposing... but I do not think what you are describing is a 401(k) plan, but a profit sharing plan... IOW, if the employee is not contributing, then the funding is all coming from a bonus (like profit sharing)....

With this small number of people, I would go to Fidelity and see what they offer... there are reps you can call...

If you are setting up a 401(k) where employees can contribute, I do think you would have to offer it to all employees up and down the corporate line... not at all sure about this, but it seems to be in the far reaches of my mind...

 

[room7]

1) a Solo or individual 401k? You can't have any employees (other than family) for that one.

2) I don't think a 401k "for some of my managers" is allowed, if that excludes other employees.

If the top corporation is only you and your managers you might be able to set up one 401k for all. There are all sorts of restrictions related to treatment of highly paid employees and "regular" emloyees. It's not usually something you just sign up for online at Fidelity.

1) Cant I have a i401k at the parent corporation which is only me
2) For managers only, can I qualify it by giving it to employees who are there 2+ years. Its a fastfood business so most people last 1 year. Or another option is I could hire my managers through the parent companies rather then the subsidiaries.

 

[bld999]

Look at a sep-ira.

 

[obgyn65]

Bank of America has a full Small Business suite of tools and they work in coordination with ML to set up and run your 401k plans.

 

[PaddyMac]

You need to be asking at Fidelity or Vanguard. There are very strict rules from ERISA when you own a business and want to have a 401k. It's possible that you can do what you want to do, but you should not be taking that advice from people here, however helpful they can be. Ask the experts. And even then read the fine print.

 

[room7]

Thanks everyone for the replies. I have learned alot but more questions to come haha