No. of Recommendations: 0
Hi:

I'm just a regular working slug with a 401k (with employer match!), a profit sharing-type plan, and the ability to buy shares of the corporation that owns my employer. Nothing too exciting...

However...

I have a friend who runs her own business (she owns a small restaurant). Can someone point me to books or info on the web that would cover the details of my friend's retirement investing options? I think I read somewhere that people who aren't covered by an employer-sponsored plans play under different rules when it comes to IRAs and such.

Thanks in advance for any help.
Really good answers will receive a coupon for a free slice of reeeally good pie. ;^)

-Scott :^)
Print the post Back To Top
No. of Recommendations: 0
I guess I should add that my friend has a few employees and is probably considered the owner of a small business instead of just "self-employed".

Thanks,

-Scott :^)
Print the post Back To Top
No. of Recommendations: 0
Greetings, Scott, and welcome. You wrote:

<<I have a friend who runs her own business (she owns a small restaurant). Can someone point me to books or info on the web that would cover the details of my friend's retirement investing options? I think I read somewhere that people who aren't covered by an employer-sponsored plans play under different rules when it comes to IRAs and such.

I guess I should add that my friend has a few employees and is probably considered the owner of a small business instead of just "self-employed".>>


Your friend can have a run of the mill traditional IRA to a formal qualified retirement plan for all employees, but for the small employer the most popular are the SEP-IRA, SIMPLE and Keogh. You can read details on them in my Foolish Retirement Plan Primer at http://www.fool.com/Retirement/Retirement.htm . For a more detailed look, get IRS Publication 560 (Retirement Plans for Small Business) at http://www.irs.ustreas.gov/prod/forms_pubs/index.html.

Basically, the choice boils down to how much your friend can afford and how generous she wishes to be to the employees working in her firm. The choices aren't easy, and for the small proprietor can be quite expensive depending on what's chosen.

Regards..Pixy
Print the post Back To Top
No. of Recommendations: 0
I generally agree with the good information in the last post, but I'd take a particular look at the SIMPLE IRA plan.
Basically, it would let your friend put away up to $6000 of salary, tax deferred; and have her business kick in 3% of her salary (on a $30,000 salary, put up to $6,000 into the IRA, have income tax on $24,000, and the business kicks in 3% of $30,000 - $900, for a total of $6,900.
Certainly this is a company plan, not a personal plan, but: it is restricted to FULL time employees, and can be further restricted to a certain length of service before eligibility. While Fools know to always take free money, if she has younger emoployees they are very likely to act very foolishly, and pass on this company benefit.

Gettergo

Print the post Back To Top
Advertisement