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Employee Benefits

Advantages of Retirement Plans

Tax Advantages:

  • Your employer contributions to qualified retirement plans are tax deductible.
  • Employee contributions (other than Roth IRA contributions) are not taxed until they are distributed to the employee.
  • Funds invested in the retirement plan grows tax deferred, or, in the case of a Roth account, tax-free.
  • You may be able to claim a tax credit equal to 50 percent of the cost for setting up and administering the plan--up to $500 per year for the first three years of the plan.
  • Certain low- and moderate-income employees may be eligible for a tax credit for part of their retirement plan contributions.

Other Advantages of Retirement Plans:

There are many types of retirement plans you can set up to fit your business. Besides the opportunity to save for your employees' and your own retirement and get a tax break, retirement plans can be tailored to offer a few advantages to both you and your employees:

  • Higher contribution limits to allow you to set aside a larger amount for retirement
  • Catch-up allowances for employees over 50 that let them set aside more money because they are closer to retirement
  • Special tax credits for smaller businesses
  • Added programs for your 401(k) that allow employees to voluntarily set aside more money after-taxes in a Roth IRA
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First Commonwealth Bank and its affiliates do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.