Retirement Plan Services
A good retirement plan can save an employer income taxes, increase employee satisfaction and productivity and provide assistance in recruiting and retaining qualified employees while it enhances the retirement benefits of the employees.
Choosing the right plan involves careful decision-making. There are a number of available choices with each type of plan offering its own special advantages. We would be happy to discuss corporate trust service with you. Then we will refer you to one of our associates who specialize in this field of trust services.
- Profit Sharing Plans. This plan offers flexibility in making contributions for employees. There are limits placed on the amount of an employee's salary that can be contributed into these plans. Company profitability, number of years of employment, investment performance and forfeitures by employees leaving employment before becoming fully vested all enter into how much retiring employees will receive from a profit sharing plan.
- Money-Purchase Pension Plan. This plan generally requires employers to contribute a specified percentage of each participating employee's compensation regardless of company profits. This type of plan can be offered in addition to a profit sharing plan in order to permit a higher deductible contribution than is available under just a profit sharing plan.
- 401 (K) Salary Deferral Plan. This plan allows employees to contribute their own funds for retirement. The employee is able to avoid current income taxes on amounts deferrable and deducted from their wages, and the earnings generated.
- Defined-Benefit Pension Plan. This plan pays a fixed retirement benefit that is based on a formula written in the plan. The employer must contribute each year the amount required to fund the defined benefits of its employees. Long term employees nearing retirement can be granted significant retirement benefits.
- Simplified Employee Pensions (SEPs). This plan is aptly named because it is simple-to-implement and simple-to-operate. They generally are less costly to operate and have fewer administrative legal requirements than other types of trusts. Basically under a SEP, individual retirement accounts are set up for each of the participating employees. Smaller companies often opt for the SEP plan.
- Savings Incentive Match Plan (Simple). The Simple plan can be structured as an IRA for each employee or as part of a 401 (K) plan. This plan also involves simplified set-up and administration, with minimal record keeping and reporting requirements. Both the employer and the employee can make contributions to a Simple Plan. An employer must have less than 100 employees who earned at least $5,000 during the preceding year to be eligible for a Simple Plan.
- Employee Stock Ownership Plans (ESOPs). Plan assets are invested in the company stock of the employer. At retirement, the employee can receive his or her retirement benefit in cash or employer stock. While this type of plan offers a lot of incentive to employees to make the company succeed, the rules governing the ESOP plan can be complex and difficult to administer particularly for stock that is not readily marketable.
1st National Community Bank and its affiliates do not render tax advice or legal advice. For specific tax advice you should consult a tax advisor. Estate planning requires legal assistance.
INVESTMENT ACCOUNTS ARE NOT DEPOSITS OF THE BANK. THESE ACCOUNTS ARE NOT FDIC INSURED, ARE NOT INSURED BY THE GOVERNMENT AND ARE NOT GUARANTEED BY THE BANK. THEY MAY DECREASE IN VALUE.