Ubiquity Retirement + Savings has been an affordable provider of streamlined 401(k) plans designed for small businesses, start-ups, and solopreneurs since 1999.
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“The sooner, the better” is the rule of thumb for starting a small business 401(k).
There is no time like the present for providing a strong benefits package to attract top talent and gain a competitive edge. Why wait to take advantage of the tax benefits and start accumulating wealth for your retirement?
Researching new plan options can be daunting, which prompts many small business owners to drag their heels. However, depending on where you live, you could be forced into a subpar option through state-mandated plans if you delay offering a small business 401(k).
If you’re worried about snagging tax savings for 2021, there are important IRS deadlines to consider.
As of 2021, 10 states have automatic enrollment in state-mandated retirement plans if employers fail to offer a plan of their own for employees. Most of these programs are structured as Roth Individual Retirement Accounts (IRAs). They are taxed now, allowing employees to avoid paying taxes in retirement.
While these plans are undoubtedly better than nothing, they fall short of the generous benefits you could offer as an employer to attract top talent, retain your workforce, boost productivity, and maintain a top-caliber reputation.
Here are the states where mandatory retirement enrollment applies:
Even if you’re not in one of these states, you may be considering a new 401(k) plan to alleviate some of your tax burden for the year, while offering a great benefit for your much-appreciated employees and setting aside retirement capital for yourself.
You can set up a plan at any time, but if you want it to count sooner rather than later, you’ll need to speak with a plan administrator by the following deadlines:
Profit-sharing or cash balance plans are no longer subject to the New Year’s Day tax return deadline for setting up a plan and making deductible contributions for 2020. Small businesses may now take advantage of extensions and have until the due date of their 2020 company tax returns to apply their company contributions.
Keep in mind this does not pertain to 401(k) deferrals; they cannot be made retroactively. However, the extra time provides an excellent opportunity for companies to snag tax savings at a time when they need it most.
Ubiquity has helped savers contribute over $2.2 billion toward retirement since 1999. Contact us to learn more about starting a small business 401(k). We take care of setup and ongoing administration for one low monthly fee–no hidden expenses, and you can work with whatever investment broker you prefer!