Lets Talk Money Online - In tough times, don't sacrifice your retirement

For some small business owners, the recent recession has been particularly difficult. Consumers cut back on their spending as economic uncertainty and, in some situations, unemployment faced many. Some business-to-business customers also cut expenses, trying to ensure they had the capital needed to survive during tough economic times.

As a result, the smallest business owners -- often Mom and Pop-type operations -- generally cut expenses across the board. This may have included reducing or eliminating contributions to their company retirement plans. The irony is small business owners often are among their plans' primary participants, so they're hurting themselves.

But they may hurt employees, too. While cutting back expenses makes sense, a penny-wise, pound-foolish approach toward putting away money for retirement may mean putting retirement off for years. But if you're a small business owner, you may have alternatives.

There is a tax-deferred retirement plan that fits your company's size and needs while providing a retirement solution for you and any employees. This type of retirement plan can provide many benefits:

Contributions made by both the employer and employees may be tax deductible;
Some smaller businesses starting a new plan may qualify for a tax credit;
Lower income employees who make contributions also may qualify for an income tax credit.

Working with your tax and financial professional, you can choose a retirement plan that's right for you. Larger companies and some smaller firms may prefer to choose a 401(k) retirement plan. This type of plan doesn't require employer contributions. The smallest businesses might choose a Simplified Employee Pension (SEP) or SIMPLE plan. These plans are typically easier to administer than other types of tax-favored retirement plans.

While these latter plans are typically more flexible and cost-efficient to operate, employers are required to make minimum contributions. Other rules and restrictions also apply. A tax professional can outline each plan's requirements and help you compare costs and benefits. Before making your choice, make sure you are comfortable with the plan's requirements, costs and contribution limits. This includes catch-up contributions for workers age 50 and older.

Whatever the economy and whichever type of business you have, there may be a retirement plan that can benefit you and your employees. Learn how to survive today without potentially sacrificing financial security tomorrow.

This is an advertisement prepared by LTM Publishing, Inc. for the use of the sender. The advertisement provided is not intended as legal or tax advice and may not be relied on for purposes of avoiding federal tax penalties. All individuals, including those involved in the estate planning process, are advised to meet with their tax and legal professionals. The individual sponsoring this newsletter will work with your tax and legal advisors to help select appropriate product solutions. We do not endorse or guarantee the content or services of any website mentioned in this newsletter. We encourage you to review the privacy policy of each website you visit. Limitations, restrictions and other rules and regulations apply to many of the financial and insurance products and concepts presented in this newsletter, and they may differ according to individual situations. The publisher does not assume liability for financial decisions based on the newsletter's contents. Great care has been taken to ensure the accuracy of the newsletter copy at press time; however, markets and tax information can change suddenly. Whole or partial reproduction of Let's Talk Money® without the written permission of the publisher is forbidden. ©LTM Publishing, Inc., 2009.

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