---
title: Is Your Company-Sponsored Retirement Plan the Right Plan?
description: Veterinary practice owners should consider 3 factors regarding their retirment plans. It may be time to revisit your company-sponsored retirement plan.
---

[Biz Tips | SVA Certified Public Accountants ](https://accountants.sva.com/biz-tips)

# [Is Your Company-Sponsored Retirement Plan the Right Plan?](https://accountants.sva.com/biz-tips/is-your-company-sponsored-retirement-plan-the-right-plan)

 Written by [Andy Slinger, CPA](https://accountants.sva.com/biz-tips/author/andy-slinger) | Oct 13, 2021

| **Highlights:** |
| --- |
| - Explains when business owners should reassess a company-sponsored retirement plan based on profitability, workforce challenges, and long-term retirement objectives. - Compares common retirement plan options, including SIMPLE IRA, SIMPLE 401(k), and safe harbor 401(k) plans, highlighting contribution structures and employer responsibilities. - Outlines important retirement plan selection factors, including administrative requirements, employee eligibility, vesting, compliance considerations, and potential tax and talent retention benefits. |

There are three factors at play this year for [veterinary practice](https://accountants.sva.com/industries/veterinary-consulting) ownership:

1. Most practice owners continue to experience significant revenue growth as we approach the end of 2021. This growth is leading to record levels of profitability and taxable income. Unfortunately, there are only so many strategies that allow practice owners to reduce their related increase in federal and state tax liability.
2. Many practices are struggling to attract and retain top talent in the current labor market.
3. Many practice owners look forward to the day they can slow down and eventually [transition](https://accountants.sva.com/services/business-succession-exit-planning) out of their practice into retirement. In order to do this, they are looking for ways to defer more of their income into a retirement plan that will allow them to live the lifestyle they desire.

If these factors apply to you, it may be a great time to revisit whether your company-sponsored retirement plan is the right plan for you right now.

Let’s look at some of the most common plans currently available.

- **SIMPLE IRA or SIMPLE 401(k) Plan** – Both plans are very similar in structure. Under these types of plans, employees can defer a portion of their salary up to the annual limit. For 2021, the limit is $13,500. Employees age 50 or older by the end of the year can defer an additional “catch-up” contribution of $3,000 for a total contribution of $16,500. In addition, employers can either choose to make a matching contribution or make non-elective contributions on behalf of all staff. Under a matching contribution, employers contribute up to 3 percent of the employee’s compensation. For the non-elective contributions, employers must contribute 2 percent of the employee’s compensation regardless of whether or not they participate in the 401(k) component.
- **Traditional or Safe Harbor 401(k) / Profit-sharing Plan** – There are three main components to a more robust traditional or safe harbor 401(k) / profit-sharing plan:

These are the most popular retirement plans for small businesses. However, it is not an exhaustive list. You should consult with your [trusted financial advisors](https://accountants.sva.com/professionals) to see which plan is best for you. In addition, there are additional factors that should be considered. They include:

- Administrative burden and related costs
- Staff eligibility requirements
- Vesting schedule and requirements
- Nondiscrimination testing
- Whether or not loans will be allowed
- Disclosure requirements
- Deadlines for establishing each plan

With some proactive planning, you can reduce your tax liability for 2021, potentially attract/retain more of your top talent, and build up that “nest egg” for retirement. Reach out to an SVA professional to start the conversation today.

 

[View full post](https://accountants.sva.com/biz-tips/is-your-company-sponsored-retirement-plan-the-right-plan)

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