February 2007
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Martin S Schneider, The 401k Dr,The401kDr.com ("T4D"), any content, information or data, in this
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Copyright © 2006 Forefield Inc. All rights reserved.
Retirement Plans for Your Small Business

A retirement plan is a critical part of a competitive benefits package. Although small business owners can sponsor a
qualified retirement plan like a 401(k) or profit-sharing plan, these plans can be expensive to maintain and relatively
difficult to administer. Luckily, there are a number of simpler alternatives.

SIMPLE IRA plans

You can adopt a SIMPLE IRA plan if you have 100 or fewer employees who earn $5,000 or more. A SIMPLE IRA plan
lets your eligible employees contribute a percentage of their salary on a pretax basis, up to $10,500 in 2007
($13,000 for employees age 50 and older). You either match each employee's contributions dollar for dollar--up to
3% of the employee's compensation--or make a fixed contribution of 2% of compensation for all eligible employees.
All contributions to the plan are fully vested (that is, immediately owned by your employees), and your contributions
are fully deductible.

SIMPLE IRA plans are easy to set up (you fill out a short IRS form to establish the plan), easy to administer, and
inexpensive to maintain. You can let each employee set up a SIMPLE IRA account at a financial institution of his or
her choosing, or you can select the financial institution that will serve as trustee and initially hold all plan contributions.


                                          Simplified employee pension (SEP) plans

                                          A SEP plan allows small business owners to set up traditional IRAs, called SEP-IRAs,          
                                          for themselves and each employee. You must generally contribute a uniform                       
                                          percentage of pay, up to 25%, for each eligible employee (up to $45,000 in 2007), but        
                                          you don't have to make contributions every year. Your employees don't directly                   
                                          contribute to the SEP plan, although they can make their regular annual IRA                       
                                          contributions to their SEP-IRAs if they choose. As with SIMPLE IRAs, all contributions          
                                          to the plan vest immediately, and your contributions are fully deductible.

                                         Most employers, regardless of size, can establish a SEP plan. SEP plans have low              
                                          start-up and operating costs, and can be established using a two-page IRS form.


But don't rule out a 401(k) plan ...

No employees? Then there is one qualified plan you should consider--the individual 401(k) plan (also known as a
solo 401(k) plan).

An individual 401(k) plan is a regular 401(k) plan combined with a profit-sharing plan. You can elect to defer up to
$15,500 of your compensation to the plan for 2007 ($20,500 if you're age 50 or older), just as you could with any
401(k) plan. In addition, as with a traditional profit-sharing plan, your business can make a tax-deductible contribution
to the plan of up to 25% of your compensation. Total contributions to your account in 2007 can't exceed $45,000,
plus any catch-up contributions (or, if less, 100% of your compensation). If you're self-employed, compensation is
your earned income from your business.

Since an individual 401(k) plan can cover only the business owner and his or her spouse, it isn't subject to the often
burdensome and complicated administrative rules and discrimination testing requirements that generally apply to
regular 401(k) and profit-sharing plans.

If you're a small business owner and haven't established a retirement savings plan, what are you waiting for? A
financial professional can help you select the plan that best fits your needs, and the needs of your employees.
The 401k Dr
Martin S Schneider
a Licensed Investment Advisor
5677 Water Spring Way
Mason, Ohio 45040
877-401KDOC (5362)
fax: 877-401-5362
martin@the401kdr.com
www.the401kdr.com