There is a cost to those free plans

Ary Rosenbaum - The Rosenbaum Law Firm P.C.
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Ary Rosenbaum - The Rosenbaum Law Firm P.C.

There is nothing wrong with free unless there is a hidden cost involved. Small business plans that don’t require filing a Form 5500 is great until you realize the cost in saving for retirement plans.

SEPs are a nice plan, but there is no opportunity for salary deferrals and you have to give the same percentage contribution to all your employees. A Simple IRA is nice too, but the deferral limit is a lot less than a 401(k) plan and again, contributions must be pro-rata, which means no greater percentage of contributions to you as owners. A solo 401(k) plan is nice too, but it’s obsolete the moment you hire an employee.

Whatever your situation is as a plan sponsor, you do yourself a disservice by not looking at all the different options of retirement plans out there and seeing what fits you.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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