Ubiquity

Why have a small business retirement plan?

Affordable and easy small business 401(k) plans. A Ubiquity Retirement + Savings™ 401(k) enables you to:

  • Attract and retain your workforce
  • Integrate payroll
  • Automate your plan administration
  • NEW for 2020: Receive up to $16,500 in tax credits over three years when you open a 401(k).*

    (*Up to $5,000 per year, plus an additional $500 per year for automatic enrollment for the first 3 years)

Uncomplicated Small Business 401(k) plans

Keep what's yours with Ubiquity's flat fee 401(k) plans.

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Retirement plans for small businesses can be easy to administer and maintain. Once the plan is set up, the primary responsibilities of the business owner are depositing plan contributions and providing plan notices to employees.

Retirement plans also offer tax benefits to the business, including the ability to deduct contributions, and for certain eligible employers, take a tax credit up to $500 per year for three years.

A retirement plan also provides tax benefits to those who participate in the plan. Contributions and investment earnings are not taxed until taken out of the plan.

A 401(k) plan can also allow after-tax Roth contributions, which will be taxable to you when you contribute them to your plan account but are tax-free if not withdrawn until you retire. Savers credits are also available for those who qualify.

Case Study

Here is a comparison of the maximum contribution possibilities under a SEP plan, a SIMPLE IRA plan, and a 401(k) plan for a business owner, age 55, with $100,000 of compensation for 2020.

2020 Maximum Contribution

Contribution

Type

Plan Type

Deferral

Catch-up

Employer

Total

SEP IRA

$0

$0

$25,000

$25,000

SIMPLE IRA

$13,000

$3,000

$3,000

$19,000

Single(k)

$19,000

$6,000

$25,000

$50,000

If you are a small business owner and need a 401(k) plan for yourself and your company, only Ubiquity offers flat-fee plans plus free expert advice. We will fully customize your 401(k) to meet the specific needs of your small business.
Check out our cost-effective, plan solutions

Small business retirement plans – know your options

Providing a retirement plan is one of the most effective ways business owners can help themselves and their employees prepare for retirement.

One common myth among business owners is that offering a retirement plan to employees is not affordable. However, small business plans do not have to be complicated or expensive. Three types of retirement plans are popular with small businesses: SEP, SIMPLE IRA, and 401(k). Understand your options and the benefits available under each type of plan, and you will find the one that is the right fit for your company.

Types of Small Business Retirement Plans:

SEP Plan:

A Simplified Employee Pension (SEP) plan is an IRA-based retirement plan funded only with employer contributions. The employer may decide from year-to-year whether to make contributions as well as an amount to contribute. SEP contributions are deposited in an eligible employee’s traditional IRA. A SEP plan could be suitable for both a self-employed business owner and an employer with employees.

SIMPLE IRA Plan

A Savings Incentive Match Plan for Employees of Small Employers (SIMPLE) IRA plan is another IRA-based retirement plan option for small businesses. Only businesses with 100 or fewer employees may establish a SIMPLE IRA plan. A SIMPLE plan is like a 401(k) plan in that employees can defer a portion of their salary.

Unlike a 401(k) plan which requires complex nondiscrimination testing, SIMPLE IRA plans have no testing requirements.

In exchange for the more straightforward administration requirements, SIMPLE IRA plans have lower contribution limits than 401(k) plans and require the employer to make a matching or nonelective contribution for eligible employees.

A SIMPLE IRA plan would not be appropriate for a self-employed individual with no employees.

Small Business 401(k) Plan

A 401(k) is a savings vehicle established by a business to help the business owner and employees save for retirement. Employees can defer a portion of their salary into the plan, and many businesses choose to match a portion of the employees’ contributions, helping retirement savings grow even faster.

A 401(k) plan provides all the same tax advantages (tax deductions, tax-deferred earnings, and tax-credits) as the other types of plans, but a 401(k) plan also offers unique benefits:

  • Higher contributions limits than SEP or SIMPLE IRA plans
  • Option to make Roth (after-tax) contributions
  • Option to take a loan from retirement savings
  • Typically, a broader range of investment options

With the budget-friendly, easy-to-use 401(k) solutions from Ubiquity Retirement + Savings, small business owners can take advantage of all the benefits of a 401(k) plan, including our “Single(k)” plan for businesses that employ only the owners (and spouses) or only employees who wouldn’t be eligible to participate in the plan.

 

Small Business Retirement Plan Comparison Chart*

SEP Plan

SIMPLE IRA Plan

401(k) Plan

Key Advantage

Easy to set up and maintain

Salary reduction plan with little administrative work

Permits high level of salary deferrals by employees

Employer eligibility

Any employer

Any employer with 100 or fewer employees that do not maintain another plan

Any employer other than a state or local unit of government

Maximum annual contribution (per participant)

Employer: up to 25% of compensation but no more than $57,000 for 2020

Employee: $13,500 in 2020; participants age 50 or over can make additional contributions up to $3,000 in 2020

Employer: Must either match employee contributions 100% of first 3% of compensation (can be reduced to as low as 1% in any 2 out of 5 yrs.), or contribute 2% of each eligible employee’s compensation

Employee: $19,500 in 2020; pre-tax or Roth; participants age 50 or over can make additional contributions up to $6,500 in 2020

Employer/Employee combined: Up to the lesser of 100% of compensation or $62,000 for 2019; an  employer can deduct all salary deferrals and employer amounts that do not exceed 25% of all participants’ compensation
Inserted: an

Minimum employee coverage requirements

Must be offered to all employees who are at least 21 years of age, employed by the employer for three of the last five years and had compensation of $600 for 2020

Must be offered to all employees who have earned an income of at least $5,000 in any prior two years and are reasonably expected to earn at least $5,000 in the current year

Generally, must be offered to all employees at least 21 years old who worked at least 1,000 hours in a previous year

Withdrawals, loans, and payments

Withdrawals permitted anytime; subject to federal income taxes; early withdrawals (generally under age 59½) subject to additional 10% tax; loans not allowed

Withdrawals permitted anytime; subject to federal income taxes; early withdrawals subject to 25% tax within first two years of participation, 10% after that; loans not allowed

Withdrawals permitted after a specified event occurs (e.g., retirement); subject to federal income taxes, early withdrawals subject to 10% tax; plan may permit loans & hardship withdrawals

* Excerpts taken from IRS Publication 3998, Choosing a Retirement Solution for Your Small Business, https://www.irs.gov/pub/irs-pdf/p3998.pdf

Setting up a 401(k) can be complicated. Only Ubiquity gives small business owners access to 401(k) experts in addition to industry leading low flat-fees. Each sales expert has over a decade of experience assisting business owners in 401(k) plan design. Take advantage of this free benefit.
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© 2020 Ubiquity Retirement + Savings
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44 Montgomery Street, Suite 3060
San Francisco, CA 94104
Support: 855.401.4357

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© 2020 Ubiquity Retirement + Savings
Privacy Policy
44 Montgomery Street, Suite 3060
San Francisco, CA 94104
Support: 855.401.4357

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