ShareBuilder 401k Announces Safe Harbor Deadline for 2010
Small Businesses Seeking to Start and Maximize Tax-Deferred Contributions for 2010 Have Until September 21 to Purchase a 401(k) Plan
SEATTLE — Small businesses seeking a tax shelter of $16,500 or more this year must purchase and set up their plan by October 1 for their safe harbor 401(k) plan to be eligible for 2010 contributions, according to ShareBuilder 401k a leading provider of retirement plans for small businesses. To ensure the plan is established by October 1, providers typically require the business to purchase its plan by September 21st or even earlier.
"Because a lot of small businesses are unaware of the government-mandated deadline of October 1, a lot of small businesses miss the opportunity to start a 401(k) plan," said Stuart Robertson, general manager of ShareBuilder 401k. "And making matters worse, many businesses don't realize that plan providers often need a couple weeks to get the plan in-place. As a company, we're trying to get the word out so that small business owners don't get shut-out."
Safe Harbor plans allow business owners to contribute the maximum deferral amount to their own account — $16,500 in 2010, or $22,000 if 50 years of age or older — and automatically satisfy the IRS non-discrimination testing associated with 401(k) plans. When a company provides a "safe harbor" match — the amount the employer puts in to an employees 401(k) account as a percent of an employee's salary — any eligible employee including the owner can personally contribute up to the maximum into his or her 401(k) account. This employer contribution, typically a match, is what helps the business avoid the hassles of government discrimination testing. It's also what allows owners and highly compensated employees the ability to contribute up to the maximum allowable limit into their personal account and to tax-defer 100% of their contributions. This helps lower personal taxes in the current year.
In addition, the match the employer provides to employees is tax deductible for the business. And if this is the first 401(k) plan for a business with less than 100 employees, the company will typically receive a tax credit up to $500 each year for the first three years of the plan to help offset administration costs.
Unlike traditional 401(k) plans that rely primarily on mutual fund offerings, ShareBuilder 401k plans are comprised of Exchange-Traded Funds (ETFs). As ShareBuilder 401k is not a fund provider, it takes an unbiased approach in the evaluation and selection of funds with a focus on low-expense investments from the leading ETF providers such as iShares, SPDR and PowerShares to create a great line-up from which participants can choose, including five model portfolios.
All ShareBuilder 401k products offer the latest features including auto-enrollment, auto-re-balancing, Roth, signature-ready 5500s and much more. The plans are typically priced significantly less to both start up and administer than traditional providers. Additionally, each plan is fully-supported with access to 401(k) consultants, customer success managers, implementation specialists and customer care for each participant.
About ShareBuilder 401k
ShareBuilder 401k provides easy, affordable and smart 401(k) retirement plans for small businesses ranging from the self-employed to those with 250 employees. ShareBuilder 401k is a leader in providing 100 percent index-based ETF investments (plus a money market) in 401(k) plans. ShareBuilder 401k offers a suite of on-demand services that make it simple for employers and employees to open and manage their retirement plans online at www.sharebuilder401k.com. ShareBuilder 401k plans provide market-efficient investments and model portfolios that make it easy for employees to select smart investments to help them get on track to meet their retirement goals. Customers can also take advantage of ShareBuilder 401k consultants, customer success managers, and customer care agents to receive assistance in choosing and managing their retirement benefits.
Dan Branley, Launch Communications