Sooner is better

Your company’s success depends on
quality employees. Attracting and
retaining them often takes more than a competitive salary or satisfying environment. One tool that many successful businesses use to attract and retain quality
employees is an attractive retirement plan.

Choosing a retirement plan for your business can be a daunting task, requiring the
consideration of a range of business and
personal needs and goals.

“The sooner you set up a retirement plan
for your business, the longer you and your
employees will be able to contribute,” says
Jamie Richardson, vice president of View-Point Investment Group, a division of
ViewPoint Bank and registered principal of
Raymond James Financial Inc. “This can
make a significant difference upon retirement. For many businesses, the question is
not ‘Should I implement a plan?’ but ‘Which
plan is right for my business?’”

Smart Business talked with Richardson
about some of the things businesses
should consider in developing their retirement plans.

What are the options in types of retirement
plans?

The choices are many. They include SEP,
profit sharing, 401(k), SIMPLE IRA and
defined benefit, just to name a few. Selecting a suitable plan is a crucial step, and
providing one has many benefits.

What are the major differences between
these plans?

There are many differences between
these types of plans. However, qualified
retirement plans fall into two broad categories: defined-benefit plans and defined-contribution plans. SEP, SIMPLE IRA,
401(k) and profit-sharing plans are all considered defined-contribution plans. For
small businesses wishing to minimize
administrative costs, a SEP or SIMPLE IRA
might be appropriate. For an employer
wanting a plan that allows employee elective deferrals without nondiscrimination
testing, a Safe-harbor 401(k) might be
attractive. Safe-harbor 401(k)s allow owners and highly compensated employees to
maximize their contributions to the plan.

What are the main considerations in setting
up a plan?

A number of considerations should be
evaluated when selecting a plan. Working
with a qualified adviser to establish strategic solutions for your financial needs is
crucial no matter what stage of growth
your business is in. Key issues in plan
design include the type of business and
ownership information, employee eligibility, funding, contribution limits and nondiscrimination testing.

In addition to plan design, a number of
components must be coordinated to help
ensure the most effective benefit for your
employees. These include investment
alternatives, record-keeping, administration, employee communication and trustee
selection.

What is the adviser’s role in setting up a
plan?

Retirement plans have many different
moving parts that must be coordinated to
run smoothly and potentially meet the needs of the organization. An adviser’s role
is to help you set reasonable expectations,
select the most appropriate plan, then
manage all the components on an ongoing
basis to help ensure a successful plan.

How often should the overall plan be
reviewed for potential adjustments?

Annual plan reviews are imperative. This
includes overall service, operations, participation, nondiscrimination testing and
investment performance. It is also important to review your plan in light of any regulatory updates, legislation, Department of
Labor and IRS matters. In August of 2006,
President Bush signed the Pension Protection Act of 2006 into law, which brings
many changes to shore up retirement plans.

What are the main criteria for selecting a
retirement plan?

You must listen to the needs of your
employees and then select the appropriate
service provider at a reasonable cost,
determine the optimal plan design provisions, choose and monitor investments,
keep up with legislative changes, help
ensure the plan is administered properly,
and educate and inform plan participants.
All of this will hopefully result in a plan that
inspires employees to reach their retirement dreams, while helping you recruit
and retain valuable associates.

Of course, not all financial planning
needs can be met by a company retirement
plan or benefits. An adviser can integrate
qualified plan goals into a customized financial plan for business owners and senior executives.

Securities are offered exclusively through
Raymond James Financial Inc. Member NASD/-SIPC, an independent broker/dealer, and are not
insured by the FDIC or any other bank insurance,
are not deposits or obligations of the bank, are not
guaranteed by the bank, and are subject to risks,
including the possible loss of principal.

JAMIE RICHARDSON is vice president of ViewPoint Investment Group, a division of ViewPoint Bank, and a registered principal of Raymond James Financial Inc. Reach him at (972) 398-3472 or [email protected].