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FREQUENTLY ASKED QUESTIONS
Getting Started
Setting Up Your Plan
Plan Integrations
Logging In To Your Account
Updating Plan Information
Retirement Plans
Payroll Deductible IRA
SIMPLE IRA
Traditional 401(k)
Safe Harbor 401(k)
SEP IRA
Solo 401(k)
Checkbook LLC IRA
Account Management
Annual Reporting
Investment Options
Distributions
Payroll Deductible IRA
What is a payroll deduction IRA, and how does it work?
A payroll deduction IRA is a streamlined retirement savings option where employees open a Traditional or Roth IRA with a financial institution and authorize automatic contributions directly from their paycheck. This makes saving simple and consistent — contributions are deducted before or after tax (depending on the IRA type) and deposited into the employee’s individual account each pay period.
Who is eligible to participate in a payroll deduction IRA?
Any employee who performs services for the company is eligible to participate. If the program is offered, it must be available to all employees, regardless of tenure or position.
What are the contribution limits for payroll deduction IRAs?
For 2026, the annual IRA contribution limit is $7,500 for individuals under age 50 and $8,100 for those age 50 and over (including the $1,100 catch-up contribution). Traditional and Roth IRAs share this combined limit, regardless of how the contributions are made (through payroll or direct deposit). These limits are set by the IRS and typically adjust annually for inflation.
What’s the difference between a payroll deduction IRA and an employer-sponsored IRA?
A payroll deduction IRA allows only employee contributions via payroll; employers do not contribute funds. Employers simply facilitate the withholding and remittance of employee-authorized contributions. An employer-sponsored IRA plan (like a SEP or SIMPLE IRA) may include employer contributions and has additional IRS reporting or matching requirements.
Can my team and I choose between a Traditional IRA and a Roth IRA with payroll deduction?
Yes, employees can select either a Traditional IRA or a Roth IRA for their payroll deductions, depending on their tax preferences and eligibility.
How do I set up and manage payroll deduction IRA contributions?
Employees open an IRA with IRA Club SBS, then authorize their employer to deduct a chosen amount from each paycheck. Contribution amounts can be changed or stopped at any time by notifying the employer or payroll provider.
What investment options are available in a payroll deduction IRA at IRA Club SBS?
At IRA Club SBS, our systems integrate with iFlip, a protected AI-powered investing platform that adapts to today’s unpredictable markets, letting you and your team invest confidently without timing the market or paying high advisor fees. Additionally, alternative investments such as real estate, private equity, precious metals, cryptocurrencies, tax liens, and private loans are permitted. IRA Club SBS is not licensed to provide investment or structuring advice or make recommendations; employees must find their own alternative investments and conduct their own due diligence. See “alternative investing” for details.
Are payroll deduction IRA contributions tax-deductible?
Traditional IRA contributions may be tax-deductible, offering immediate tax benefits. Roth IRA contributions are made with after-tax dollars and grow tax-free, but are not deductible.
How do withdrawals and penalties work for payroll deduction IRAs?
Withdrawals from a Traditional IRA before age 59½ are subject to income tax and a 10% early withdrawal penalty. Roth IRA contributions can be withdrawn penalty-free at any time, but unqualified earnings withdrawn before 59 ½ may incur taxes and penalties.
Why should I, as a small business owner, offer payroll deduction IRAs to employees?
Payroll deduction IRAs are easy to set up, require minimal administration, and help employees save for retirement. They offer a valuable benefit without employer contributions or complex reporting requirements, making them ideal for small businesses. Contact our onboarding specialist at IRA Club SBS here.
Simple IRA
What is a SIMPLE IRA and how does it work for small businesses?
A SIMPLE IRA (Savings Incentive Match Plan for Employees) is a retirement plan designed for businesses with 100 or fewer employees. Both employers and employees can contribute, with employers required to make either matching or non-elective contributions. The plan is cost-effective and helps employees save for retirement with tax advantages.
Who is eligible to participate in a SIMPLE IRA plan?
Businesses with 100 or fewer employees who earned at least $5,000 in any two previous years are eligible to set up a SIMPLE IRA. Employees who meet the $5,000 earnings threshold can participate.
What are the contribution limits for SIMPLE IRAs in 2025?
For 2025, employees can contribute up to $16,500, or $19,500 if they are age 50 or older. Employees aged 60 to 63 can contribute an additional $5,250. Employers must make either a matching contribution up to 3% of compensation or a 2% non-elective contribution.
How does employer matching work in a SIMPLE IRA?
Employers can choose to match employee contributions dollar-for-dollar up to 3% of each employee’s salary or contribute 2% of each eligible employee’s salary regardless of whether the employee contributes.
What are the main benefits of a SIMPLE IRA for small business owners?
SIMPLE IRAs are easy and inexpensive to set up, require no annual IRS filing on the employer’s part, provide tax-deductible employer contributions, and help attract and retain employees with a valuable retirement benefit.
How do employees make contributions to a SIMPLE IRA?
Employees elect to have a portion of their salary automatically deducted and contributed to their SIMPLE IRA on a pre-tax basis, reducing their taxable income for the year.
What investment options are available in a SIMPLE IRA?
At IRA Club SBS, our systems integrate with iFlip, a Shield+ protected AI-powered investing platform that adapts to today’s unpredictable markets, letting you and your team invest confidently without timing the market or paying high advisor fees. Additionally, alternative investments such as real estate, private equity, precious metals, cryptocurrencies, tax liens, and private loans are permitted. IRA Club SBS is not licensed to provide investment or structuring advice or make recommendations; employees must find their own alternative investments and conduct their own due diligence. See “alternative investing” for details.
Are SIMPLE IRA contributions tax-deductible?
Employee contributions are made pre-tax, reducing taxable income. Employer contributions are also tax-deductible as a business expense.
What are the rules for withdrawing money from a SIMPLE IRA?
Withdrawals before age 59½ are subject to income tax and a 10% penalty. If withdrawn within the first two years of participation, the penalty increases to 25%.
How do I set up a SIMPLE IRA plan for my small business?
You can establish a SIMPLE IRA by completing IRS Form 5304-SIMPLE or 5305-SIMPLE. The process is straightforward, with minimal paperwork and no annual IRS filing requirement for the employer. Contact our onboarding specialist at IRA Club SBS here.
Traditional 401(k)
What is a traditional 401(k) plan and how does it work?
A traditional 401(k) is a retirement plan sponsored by an employer that allows employees to contribute pre-tax income. These contributions reduce taxable income today and grow tax-deferred until withdrawal in retirement, when the funds are taxed as ordinary income. Our 401(k)s also have the ability for Roth components within the 401(k).
How can a traditional 401(k) help my small business and employees?
A 401(k) typically offers higher contribution limits than a personal IRA and helps attract and retain skilled employees while offering tax advantages to your business. Employer contributions are tax-deductible, and employees benefit from structured, long-term retirement savings.
What are the annual contribution limits for a traditional 401(k)?
In 2025, employees can contribute up to $23,000 in pre-tax income, with an additional $7,500 in catch-up contributions for those age 50 and over. Thanks to SECURE 2.0, participants turning age 60-63 during the plan year could be put in an additional $11,250 as a catch-up contribution in 2025.
Who is eligible to participate in a traditional 401(k) plan?
Employers can define eligibility, but federal rules allow most employees who are at least 21 years old and have a minimum length of service of one year to participate. Some plans offer immediate eligibility to simplify enrolment.
What investment choices are available in a traditional 401(k)?
At IRA Club SBS, our systems integrate with iFlip, a Shield+ protected AI-powered investing platform that adapts to today’s unpredictable markets, letting you and your team invest confidently without timing the market or paying high advisor fees. Additionally, alternative investments such as real estate, private equity, precious metals, cryptocurrencies, tax liens, and private loans are permitted. IRA Club SBS is not licensed to provide investment or structuring advice or make recommendations; employees must find their own alternative investments and conduct their own due diligence. See “alternative investing” for details.
What are the tax benefits of a traditional 401(k)?
Traditional 401(k) contributions are made pre-tax, lowering current taxable income and growing tax-deferred until withdrawal, often at a lower retirement tax rate. 401(k) contributions that have a Roth component are after-tax, but qualified withdrawals of both contributions and investment earnings are tax-free once the account is at least five years old and the owner is 59½ or older.
Can my business match employee contributions?
Yes, businesses can choose to match employee contributions, such as 100% of the first 3% of salary. Matches are optional but enhance the plan’s value, and matching funds are also tax-deductible for your business.
What happens if an employee withdraws funds early?
Withdrawals before age 59½ typically incur a 10% penalty and income tax, unless certain exceptions apply (e.g., disability, qualified hardship). Educating employees about these rules helps protect their savings.
What are required minimum distributions (RMDs) for traditional 401(k)s?
RMDs are mandatory withdrawals that begin at age 73 for traditional 401(k)s. The IRS sets the annual amount based on account balance and life expectancy. Failure to take RMDs can result in additional penalties.
How do I get started with a traditional 401(k) for my business?
Setting up a 401(k) at IRA Club SBS is quick and simple. Schedule a consultation with an IRA Club SBS onboarding specialist to find the best plan to fit your 401(k), and get your paperwork set up.
Safe Harbor 401(k)
What is a Safe Harbor 401(k) and how does it work?
A Safe Harbor 401(k) is a retirement plan that automatically meets IRS compliance tests by requiring employer contributions, making it easier for owners and highly paid employees to maximize their savings.
What are the employer contribution requirements for a Safe Harbor 401(k)?
Employers choose between two options:
Contribute 3% of pay for all eligible employees, regardless of participation.
Match 100% of the first 3% employees’ contributions, plus 50% of the next 2%.
Schedule a call to discuss which option makes sense for your business.
What are the 2025 Safe Harbor 401(k) contribution limits?
For 2025, employees can contribute up to $23,500, with an additional $7,500 catch-up if age 50+. Thanks to SECURE 2.0, participants turning age 60-63 during the plan year could be eligible for an even larger catch-up contribution, potentially reaching $34,750.
How does a Safe Harbor 401(k) benefit small business owners?
Safe Harbor 401(k) plans give small businesses a simpler alternative to traditional 401(k)s, reducing the time and effort needed for plan administration. For employers already considering offering a match, a Safe Harbor plan can streamline compliance, maximize both employer and employee savings, and strengthen your ability to attract and retain top talent.
How is a Safe Harbor 401(k) different from a traditional 401(k)?
Unlike traditional 401(k) plans, Safe Harbor plans have built-in “safe harbor” features that bypass nondiscrimination testing by requiring employer contributions, simplifying compliance.
When is the deadline to start a Safe Harbor 401(k) plan for 2025?
To be effective for the 2025 calendar year, most Safe Harbor 401(k) plans must be set up by October 1, 2025, and be ready to receive 401(k) elective deferral contributions.
Can I offer a Safe Harbor 401(k) with automatic enrollment or Roth options?
Our plans come with auto-enrollment services. Contributions can take three different forms, the first two of which are matching. This means employees must make traditional or Roth 401(k) elective deferrals to their accounts to receive the matching contributions.
How does AI & Alternative investing integrate with a Safe Harbor 401(k)?
At IRA Club SBS, our systems integrate with iFlip, a Shield+ protected AI-powered investing platform that adapts to today’s unpredictable markets, letting you and your team invest confidently without timing the market or paying high advisor fees. Additionally, alternative investments such as real estate, private equity, precious metals, cryptocurrencies, tax liens, and private loans are permitted. IRA Club SBS is not licensed to provide investment or structuring advice or make recommendations; employees must find their own alternative investments and conduct their own due diligence. See “alternative investing” for details.
What are the compliance advantages of Safe Harbor 401(k) plans?
These plans automatically satisfy key IRS nondiscrimination tests, including the ADP, ACP, and top-heavy tests, reducing risk and administrative burden.
How much does it cost to set up and maintain a Safe Harbor 401(k)?
The Safe Harbor 401(k) at IRA Club SBS is our most custom 401(k) with access to an exclusive support team for plan admins, employees, and more, starting at $2,950 annually with an active participation fee. Contact Sales to learn more about flexible pricing and how to customize the 401(k) to best fit your needs.
SEP IRA
What is a SEP IRA and how does it work for small businesses?
A SEP IRA (Simplified Employee Pension Individual Retirement Account) is a tax-advantaged retirement plan designed for self-employed individuals and small business owners. Employers make tax-deductible contributions to employee accounts, including their own, with flexible annual contribution amounts and minimal administrative requirements.
Who is eligible to set up a SEP IRA?
Any business owner, including sole proprietors, partnerships, LLCs, S corporations, and C corporations, can establish a SEP IRA. It’s ideal for businesses with few or no employees, but is also available to companies with any number of employees. Contact our onboarding specialist at IRA Club SBS here.
What are the SEP IRA contribution limits for 2025?
For 2025, employers can contribute up to 25% of each eligible employee’s compensation, up to a maximum of $70,000 per person.
Are SEP IRA contributions tax-deductible for small business owners?
Yes, all employer contributions to a SEP IRA are tax-deductible, reducing the business’s taxable income. Earnings in the account grow tax-deferred until withdrawal.
Can employees contribute to their own SEP IRA accounts?
No, only employers can make contributions to SEP IRA accounts. Employees cannot make their own salary deferral contributions, but they can have other IRAs for personal contributions.
What are the main benefits of a SEP IRA for small businesses?
SEP IRAs offer high contribution limits, flexible annual funding, immediate vesting for employees, easy setup, low administrative costs, and no annual IRS filing requirements for the employer.
How are SEP IRA contributions allocated among employees?
Employers must contribute the same percentage of compensation to each eligible employee’s SEP IRA, including their own account. Contributions must be nondiscriminatory and based only on the first $350,000 of compensation for 2025.
What investment options are available in a SEP IRA?
SEP IRAs offer a wide range of investment options, enabling you to tailor your investment strategy to your specific goals and risk tolerance. You can invest in traditional assets like stocks, bonds, ETFs, and even A.I Trading portfolios powered by iFlip. Additionally, alternative investments such as real estate, private equity, precious metals, cryptocurrencies, tax liens, and private loans are permitted. IRA Club SBS is not licensed to provide investment or structuring advice or make recommendations; employees must find their own alternative investments and conduct their own due diligence. See “alternative investing” for details.
When is the deadline to set up and fund a SEP IRA for the previous tax year?
A SEP IRA can be established and funded by the business’s tax filing deadline, including extensions—usually April 15 or October 15 if an extension is filed.
What are the withdrawal rules and penalties for SEP IRAs?
Withdrawals before age 59½ are subject to income tax and a 10% early withdrawal penalty. Required minimum distributions must begin at age 73.
Solo 401(k)
What is a Solo 401(k) and how does it work for self-employed individuals?
A Solo 401(k) is a retirement plan designed for self-employed individuals or business owners with no full-time employees other than a spouse. It allows for high annual contributions, tax advantages, and flexible investment options, including both traditional and Roth contributions.
Who is eligible to open a Solo 401(k)?
You are eligible if you are self-employed or own a small business with no full-time employees except your spouse. Any business structure qualifies, including sole proprietors, LLCs, partnerships, and corporations.
What are the Solo 401(k) contribution limits for 2025?
For 2025, you can contribute up to $70,000 if you are under 50, or $77,500 if you are 50 or older. This includes both employee salary deferrals and employer profit-sharing contributions. Between the ages of 60-63, the combined total is increased and must not exceed $81,250. Employers cannot make Roth contributions.
Can I make both pre-tax and Roth contributions to a Solo 401(k)?
Yes, Solo 401(k)s allow for both pre-tax (traditional) and Roth (after-tax) contributions, giving you flexibility in managing your current and future tax liabilities.
What investment options are available in a Solo 401(k)?
A Solo 401(k) offers a wide range of investment options, enabling you to tailor your investment strategy to your specific goals and risk tolerance. You can invest in traditional assets like stocks, bonds, ETFs, and even A.I Trading portfolios powered by iFlip. Additionally, alternative investments such as real estate, private equity, precious metals, cryptocurrencies, tax liens, and private loans are permitted. IRA Club SBS is not licensed to provide investment or structuring advice or make recommendations; employees must find their own alternative investments and conduct their own due diligence. See “alternative investing” for details.
Can I take a loan from my Solo 401(k)?
Yes, many Solo 401(k) plans allow you to borrow up to 50% of your account balance, up to $50,000, for any purpose. Schedule a consultation with an onboarding specialist to discuss additional details here.
How do I set up a Solo 401(k) for my business?
To set up a Solo 401(k), schedule a consultation with an onboarding specialist, and we’ll get your account open and ready to go.
What are the tax benefits of a Solo 401(k) for self-employed individuals?
Contributions are generally tax-deductible, reducing your taxable income. Roth contributions grow tax-free, and all investment earnings are tax-deferred until withdrawal.
Can I roll over other retirement accounts into a Solo 401(k)?
Yes, you can roll over funds from IRAs, SEP IRAs, previous employer 401(k)s, and most other qualified retirement plans into your Solo 401(k).
What happens if I hire employees after opening a Solo 401(k)?
If you hire full-time employees (other than your spouse), you may no longer be eligible for a Solo 401(k) and may need to transition to a traditional 401(k) plan that covers all eligible employees.
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