Let's talk business Q&A

Q:

I want to buy disability insurance for two employees. Why have I been quoted very different premiums for each employee?

A:

Insurers look at a variety of factors when determining premiums. For example, a person’s age, sex, health status and state of residence can impact premiums. In addition, insurers look at a person’s occupation/job duties to measure the risk of disability. Of course, the size of the benefit amount, the length of the benefit period and the elimination period (the period from the onset of the disability until the benefit is received) will also determine how much is charged for a policy.

Q:

Can employers claim a tax credit for the costs of setting up a retirement plan?

A:

Eligible small employers may be able to claim a tax credit for some of the ordinary and necessary costs of starting a retirement plan, such as Simplified Employee Pension (SEP) plan, a SIMPLE IRA or a qualified retirement plan. The credit amounts to 50% of eligible start-up costs for each of the first three plan years, up to a maximum credit of $500 per year. Ordinary and necessary costs are the costs to set up and administer the retirement plan as well as to educate employees about it. The credit is available only if certain requirements are met.

• The employer must have no more than 100 employees who received at least $5,000 in compensation for the preceding year.


• The plan must cover at least one non-highly compensated employee.


• The employer generally cannot have had another retirement plan during the three tax years prior to the tax year in which the new plan is started.

For more information, consult your tax advisor.