Retirement Benefit Plans Retirement plans can include 401(k)s, IRAs (including Roth IRAs), SEP-IRAs, SIMPLE IRAs, 403(b), 457(b), and more. The rules and limits change regularly—professional guidance is strongly recommended. Note: • Starting on or after Jan. 1, 2026, employers with five or more employees must offer a retirement savings plan or participate in Minnesota Secure Choice Retirement Program (MSCRP), a state-run payroll IRA program for employees without a plan. • Employers who already offer any IRS-qualified retirement plan (401(k), SEP, SIMPLE IRA, etc.) are exempt from this new mandate. • If you do not offer a plan, you must participate in Minnesota Secure Choice, which is a payroll- deduction IRA (Traditional or Roth), with both employee contributions and administration handled by the state program—employers do not contribute. Implementation is phased by employer size between 2026 and 2028, with the requirement starting at five employees or more. Employers need to facilitate payroll deductions, manage employee communications, and participate in the program if they do not have a plan. Sole Proprietorship A sole proprietor can set up and contribute to a retirement account such as a Keogh plan, SEP IRA, or individual retirement account (IRA). The amount you can contribute depends on your income and self-employment earnings. Tax Treatment: • Your contributions to your own Keogh plan or IRA are generally deductible on your federal Form 1040, U.S. Individual Income Tax Return as part of adjusting your gross income. • However, these contributions do not count as business expenses on your Schedule C (Form 1040), Profit or Loss from Business (Sole Proprietorship) and do not reduce your business net income for self-employment tax purposes. • Minnesota generally follows IRS rules for Keogh and IRA contributions and deductions. Always check current contribution limits—and consult a tax professional to maximize your retirement and tax benefits. Partnership Partners in a partnership can contribute to a Keogh plan set up by the partnership, as well as to their own individual retirement accounts (IRAs), if they meet IRS income and contribution requirements. Partners can deduct their own qualified contributions to their retirement accounts from their personal income on their federal Form 1040, U.S. Individual Income Tax Return, but these contributions are not deducted from partnership income for tax purposes.
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