Solutions 4 Financial Independence: 05/16/17

By  | 

BRIDGEPORT, W.Va (WDTV) - Question: "I am in charge of a church and we want to start a retirement plan. Is a 403(b) retirement plan our only option?"

Answer: (John Halterman, Beacon Wealth Management) "A lot of times people think of 403(b)'s because 403(b)'s are retirement plans that are designed for church organizations, non-profits, and education systems. At the same time it's not your only option.

"Years ago the reason why people did 403(b)'s was because there wasn't as much reporting. So because of less reporting it was very simple to start one of these for a non-profit. But today the 403(b) plan has the same amount of reporting as a 401(k) which is the equivalent in the private sector. So sometimes, depending on what you're trying to accomplish, it may or may not be the best option for you.

"A couple things you have to be thinking about. Number one, how much money do you think your people are going to want to be able to put into it. You can do a 403(b) and it can do $18,000 contribution a year. Whereas if you do something like a simple IRA it's only allowed $12,500.

"The second thing you got to be thinking about is, how much free money do you want to give to your employees? So if you only want to match up to three, then a simple IRA could be very suitable. If you want to have more flexibility and do more money then of course a 401(k) or a 403(b) would allow you to do more.

"The last thing you want to think about is what type of administration you want to do. In a simple IRA it's designed to be simple. So there is no tax return for it. Whereas in the 403(b) you're going to have a more complex tax return.

"So depending on the complexity and the features you want to have, you do have other options. You could do 403(b) or you could do simple IRA."