NEW YORK - Amid the turbulence of the plunging stock market, there is a great opportunity for small-business owners - if they set up retirement plans now, they will position themselves and their employees for big gains when Wall Street finally recovers.
And it's still possible to set up a plan and get a break on 2007 taxes.
The savviest investors, especially those saving for a retirement that's years away, buy when the market is down.
"What's the best place for long-term growth? The stock market," said Bob Doyle, president of Doyle Wealth Management Inc. in St. Petersburg, Fla. "It's down, but wouldn't you like to buy something cheaper as opposed to something more expensive?"
Doyle acknowledged that it's human nature to shun the stock market when it's in a slump.
But, Doyle noted, that while there have been bear markets since the end of World War II, "they all ended and they were all followed by resounding bull markets."
Small-business owners have a number of retirement plan options available. If you're considering one, you should first learn about the various types of plans, and you should consult with a tax professional and perhaps a benefits consultant to determine which one is best for your company.
One of the most popular plans, the Simplified Employee Pension, or SEP, allows a company to deduct up to $45,000 (for the 2007 tax year; the amount may change for 2008) for its contributions to an employee's account.
Another plan with a minimum of paper is the SIMPLE, or Savings Incentive Match Plan for Employees. It provides for employers to match employee contributions similar to the process in a 401(k) - and it's possible for a SIMPLE to be a 401(k). It carries more restrictions than an SEP. But it has some advantages; contributions can be made by payroll deductions.
Other plans include more formal 401(k) profit-sharing and defined benefit plans.