California will require that small businesses have a retirement plan
If you're a small business owner with employees, and don't already have a retirement plan in place, you will soon be required to have one. Governor Brown signed into law that California companies with 5 or more employees will be required to have a plan in place.
If you currently don't have a plan in place, you have time. This is expected to roll out in early 2019 for companies with 100 or more employees and phases-in for companies with 5 or more employees over the following three years. Companies with fewer than five employees are exempt.
This new rule ties in with the new California Secure Choice. This is the new state retirement plan and an alternative to the traditional retirement plan that employers can adopt. California Secure Choice sets a default employee deferral rate of 3% and does not allow for employer contributions.
55% of Californians currently don't have access to a company retirement plan. More than 70% of employees in the state are anticipated to rely solely on their social security income in retirement. The state legislature believes that if employees are given the chance, they would save more for retirement.
If you're an employer, it's not too late to take action before this rule takes effect. There are various retirement plan options that you can adopt with little overhead cost and can easy to implement. By adopting your own retirement plan this would allow you, as the employer, to save significantly more for retirement. Your contributions are also tax-deductible. Keep in mind that a plan must be selected sometimes the year before it can take effect. Planning ahead is necessary in order to get great results.
Working to keep you informed! At Eureka Wealth Management, I work with small business owners to help them determine what retirement plan is right for their business. I also do a comprehensive review of assets, liabilities, and cash flow, and prepare tax, insurance, and estate strategies. Selecting a retirement plan impacts your overall cash flow and taxes which is why I can best help you determine which plan is most beneficial. You can reach us at (760) 537-0791 or info@eurekawealthmanagement.com.
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