Ubiquity

Small Business 401k

A Guide for Small Business Owners

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Small business 401k plans offer unique benefits to both business owners and their employees who participate in the plan.

Many small business employers want to provide a 401k to help their employees, but don’t think they have time or resources to manage a retirement plan, or don’t think they can afford one. However, with the budget-friendly, easy-to-use 401k solutions from Ubiquity Retirement + Savings™, small business owners can take advantage of the business tax benefits of a 401k plan and offer competitive retirement plan benefits for employees.

What is a small business 401k?

A 401k plan can be adopted by any employer other than a state or local unit of government. A small business 401k is defined as a 401k plan for a company with anywhere from one to 100 employees. At Ubiquity, we specialize in the retirement plan needs of small and growing businesses, including owner-only and start-up businesses.

If a business only employs the owner, or only has employees who would not be eligible to participate in a plan, then our Single(k)® plan would your best option.

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Setting up a 401k can be complicated. Only Ubiquity gives small business owners access to 401k experts in addition to industry leading low flat-fees.

Talk to an expert today

Benefits of small business 401k

With the right 401k solution, both the business and its employees enjoy substantial business benefits, including:

  • Competitive retirement benefits to attract and retain employees
  • Efficient process for managing employee contributions through payroll deduction
  • Fewer employees working past their desired retirement date, which can impact morale and business costs
  • Tax deduction for plan expenses paid by the business owner
  • Tax credit for plan start-up costs

Small business owners along with their employees, can benefit personally from saving in a 401k plan, including:

  • Efficient, disciplined savings through automatic payroll deductions
  • Higher contribution amounts than permitted in SEP or SIMPLE IRA plans
  • Reduced taxable income through pre-tax salary contributions
  • Control over when taxes are paid on retirement assets (pre-tax versus post-tax Roth contributions)
  • Tax credits for some employees
  • Access to a broad range of investment options
  • Tax-deferred growth on investments while in the 401k plan
  • Option to take a loan from retirement savings
  • Ability to move assets to other retirement arrangements if changing jobs or retiring

Not too familiar with 401k plans?

No problem – we’ll give you the lowdown.

No confusing language or too much financial jargon. Just a clear, concise, simple explanation.

Download Ubiquity’s Guide to Small Business 401k Planning and learn how a 401k can help lower your taxable income at a low fee and help you and your employees achieve greater financial security.

After almost two decades helping small business owners overcome their fears related to saving for retirement, we understand what’s holding you back, and we’re always here to help. The Ubiquity 401k Guide can help you better understand your small business 401k options, and help you find the right small business retirement plan.

Free guide to 401k

Our retirement planning experts will work closely with you to develop a retirement strategy that meets your needs and delivers beyond what you may have thought possible.

Maximum pre-tax contributions

Business owners who are looking to maximize their savings can contribute a significant amount to a 401k each year. Plan contribution limits for owners and high earners may be reduced if other employees are not actively saving in the plan. Ubiquity retirement plan consultants work with each business owner to identify the optimum plan design and resources to meet their individual needs.

Contribution Type

2018 Limits*

2018 Limits*

Tax Benefit

Consideration

Salary deferral contribution + catch-up contribution if age 50 or older

$18,500

+

$6,000 =

$24,500 maximum contribution

$18,500

+

$6,000 =

$24,500 maximum contribution

Tax deductible as a business expense and lowers owner’s or employee’s level of taxable income

Owner and highly paid employees may have to limit contributions if other employees are saving at low rates unless a safe harbor 401k plan  provision is used

Employer matching or profit sharing contributions

Up to 25% of eligible compensation

Up to 25% of eligible compensation

Tax deductible as a business expense

Tax deductible as a business expense
Contribution amount can vary year to year (unless a Safe Harbor 401k plan)

 

Employer contributions must be nondiscriminatory

 

Owner can set employee eligibility requirements (e.g., must be age 21) and can apply a vesting schedule (unless a Safe Harbor 401k plan)

Maximum contributions

100% of income up to $54,500 ($60,500 if eligible for age 50 catch-up)

100% of income up to $54,500 ($60,500 if eligible for age 50 catch-up)

Maximum contribution limit applies to each participant

Plan start-up tax credit

Business owners may be able to claim a tax credit for the administrative expenses of establishing their first retirement plan. The tax credit is equal to 50% of eligible start-up costs, with a maximum of $500 per year for three years (total of $1,500).

How to set up a small business 401k plan

Although each 401k provider will have its documentation and procedures for establishing a 401k plan, most business owners will need to:

  • Select plan features and services
  • Adopt a written plan
  • Select a menu of investments for the plan
  • Provide employee demographic information to service providers
  • Notify eligible employees of the terms of the plan

Ubiquity manages all five steps for business owners online or with the help of a Retirement Plan Consultant.

Start here to set up a plan
“I am a new plan sponsor for my employer with Ubiquity. The friendliness of customer support was outstanding. So far, I am very impressed with Ubiquity! ”
- Alan Drage, Geyser Equipment, LLC
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Operating a 401k for small business owners

Once a 401k is set up, the business owner will work with the chosen service provider to make sure the plan operates according to the terms of the plan document and in compliance with other IRS tax rules that apply to 401k plans.

A business owner is responsible for:

Ubiquity helps small business owners handle all of these plan maintenance steps. Start here to set up a plan.

Start here to set up a plan

Depositing contributions

One of the most important responsibilities of a business owner operating a 401k plan is to deposit plan contributions that are withheld from employees’ paychecks.

Business owners who do not make timely deposits may be subject to IRS and Department of Labor DOL) penalties. Small businesses (those with fewer than 100 employees) need to meet deposit requirements within seven days following payroll.

Contributions made by the business owner (e.g., matching, profit sharing) must be deposited by the business’s federal income tax return due date, including extensions.

 

Learn more

If you are a small business owner and need a 401k plan for yourself and your company, only Ubiquity offers flat-fee plans plus free expert advice.

We will fully customize your 401k to meet the specific needs of your small business.

Check out our cost-effective plan solutions

Setting up a 401k can be complicated. Only Ubiquity gives small business owners access to 401k experts in addition to industry leading low flat-fees. Each sales expert has over a decade of experience assisting business owners in 401k plan design. Take advantage of this free benefit.

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1160 Battery Street, Suite 350, San Francisco, CA 94111 / Support: 855.401.4357

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© 2018 Ubiquity Retirement + Savings / Privacy Policy
1160 Battery Street, Suite 350, San Francisco, CA 94111 / Support: 855.401.4357