RETIREMENT PLANS

There is uncertainty whether Social Security will be available in the future, so planning for retirement is especially important for you and your employees.

Today's retirement plans provide significant flexibility and control for you and your business. Your company can decide how to fund its plan, determine the employees who are eligible to participate, control when workers are vested and what types of investment funds are included.  Employers can also decide the degree of control employees have over investments and how company contributions are allocated. 

Because different types of retirement plans provide different opportunities for both employer and employee, working with a trusted professional is essential when evaluating and implementing a plan for your company.  Brief overviews of several plan options are provided below. Northwest Financial Group* can help you bring the right solution to your workplace. 

• 401(k)
• 403(b)
• Individual Retirement Accounts (IRAs) – Simplified Employee Pension (SEP) and SIMPLE Plans
• Defined Contribution Plans
• Profit Sharing Plans

An Added Benefit of Working with Northwest Financial Group
With any of these plans, another important benefit you can offer to employees is the opportunity to schedule complimentary, no obligation consultations with Northwest Financial representatives. Individual appointments can be arranged to discuss employees’ needs with regard to investments, asset allocations, retirement strategies, etc.

Our experienced financial consultants will also review your current plans and
programs to determine if those choices are still the best fit for your organization.

Contact us or call 703-810-1072, ext. 110 (toll-free 1-800-269-2156, ext. 110) to schedule an appointment to discuss your needs. We look forward to being of service.

401(k) Plan allows employees to reserve money for retirement on a pre-tax basis through a plan sponsored by their employer. The Federal government has created special tax advantages for contributions made into 401(k) plans, including, but not limited to, allowing contributions deducted directly from employee pay before taxes are calculated and allowing the earnings on funds in the employee's 401(k) account to grow tax-deferred until withdrawn at retirement. There are no limitations as to the number of employees that may be included in the 401(k) plan. Additionally, this plan allows an employer to provide matching contributions or profit sharing contributions to the plan. There are special rules governing the operation of a 401(k) plan. For example, there is a dollar limit on the amount an employee may elect to defer each year. Employees who participate in 401(k) plans assume responsibility for their retirement income by contributing part of their salary and, in many instances, by directing their own investments.

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403(b) Plan is a tax-deferred retirement plan offered by nonprofit organizations, public schools, and municipal agencies. Generally, 403(b) plans follow 401(k) rules for contributions, rollovers, and withdrawals. Contributions and investment earnings grow tax deferred until withdrawal (assumed to be retirement), at which time they are taxed as ordinary income. Investment choices in 403(b) plans may be more limited than in 401(k) plans. The name refers to the relevant section in the Internal Revenue Code.

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Individual Retirement Accounts (IRAs):

• Simplified Employee Pension (SEP IRA) - SEP Plans allow an employer to make deductible contributions for the benefit of participating employees. The contributions are made to individual retirement accounts set up for participants in the plan. They are sometimes used instead of retirement plans because they have fewer administrative and tax filing requirements. There are rules relative to contributions and penalties for premature distributions.
• SIMPLE IRA is a Savings Incentive Match PLan for Employees. It is an employer-sponsored and administered plan for companies with fewer than 100 employees. The employer can establish and fund a retirement plan for the benefit of him/herself and his/her employees. Separate rules relative to required employer contributions and premature distribution penalties apply.

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Defined Contribution Plans may require specific rates of contribution, but do not guarantee a specific retirement benefit. In a deferred contribution plan, the employee elects to defer some amount of his/her salary into the plan and bears the investment risk.  A 401(k) plan is one type of defined contribution plan. Other types of defined contribution plans include profit-sharing plans, money purchase plans and employee stock ownership plans. This differs from a defined benefit plan, such as a pension plan, in which a retired employee receives a specific amount based on salary history.

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Profit Sharing Plan is a defined contribution plan where the employer's contribution is a discretionary decision made by the company each year. This may be accomplished as follows: (1) The plan may indicate that contributions will be a percentage of the net profits of the business. (2) The plan may allow the employer to declare a contribution every year. (3) The plan may set performance goals for the business, providing for a contribution only if the goal is met. Once the contribution is determined, it is divided among all employee accounts, usually in proportion to compensation. Profit-sharing plans are attractive because first, the business is not obligated to make contributions; second, employees have an incentive to improve their performance because good performance of the business may translate into a contribution to their retirement.

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Contact us or call 703-810-1072, ext. 110 (toll-free 1-800-269-2156, ext. 110) to schedule an appointment to discuss your needs.