That Grows With You
Choosing a Retirement Plan for Your Business
Hiring and keeping the right employees is important to your business's success — and offering an attractive benefits package is a key part of recruiting and retaining the best people. The information below provides an overview of small business retirement plans available through State Farm®.
Sole proprietors, partnerships, limited liability companies, Sub S Corporations, and C Corporations that do not employ any common-law employees have several options for business retirement plans. The business owner's spouse (if employed and compensated by the business) may also participate in these plans.
For businesses with no common-law employees, these business retirement plans allow owners to maximize their contributions. Employer contributions are tax deductible (subject to applicable limits) to the business, and salary deferrals can be made on a pre-tax basis (which are excluded from income for federal income tax purposes) or as Designated Roth Contributions.
Simplified employee pension (SEP) plans allow business owners to set aside money in a retirement account for themselves (and spouse, if applicable) subject to applicable limits. There are no administration costs, paperwork is minimal, and all contributions are tax deductible to the business.
Since an owner-only business is less than 100 employees, a business owner can establish a SIMPLE IRA (including a spouse). A business owner (and spouse) is able to defer a portion of his/her salary as pre-tax contributions and the business makes a tax-deductible matching or non-elective contribution. There are no administration costs and minimal paperwork.
Service is available online and through a toll-free phone number, so you can focus on running your business.
Simplified employee pension (SEP) plans allow the business to make all contributions for every eligible employee. There are no administration costs, paperwork is minimal, and all contributions are tax deductible to the business (subject to applicable limits).
Any business with 100 or fewer employees can establish a SIMPLE IRA. There are no administration costs and it offers benefits similar to a 401(k) plan. Employees are able to defer a portion of their salary, pre-tax, and the business makes a tax-deductible matching or non-elective contribution.
Safe Harbor 401(k) Plan
Most for-profit and some non-profit businesses can establish a 401(k). The Safe Harbor 401(k) Plan requires the business to contribute either matching or non-elective contributions to the plan on behalf of eligible employees. Safe Harbor plans do not restrict the amount of money highly compensated employees can contribute to the plan. Eligible employees can contribute a portion of their salaries, either pre-tax or as a Designated Roth Contribution. Profit-sharing contributions are optional and employer contributions are tax deductible.
Traditional 401(k) Plan
The traditional 401(k) plan allows eligible employees to contribute a portion of their salaries, either pre-tax or as a designated Roth contribution. The business may choose to contribute matching, non-elective, or profit-sharing contributions to the plan on behalf of eligible employees. Employer contributions are tax deductible, and employee contributions may be excluded from income for federal income tax purposes.
|Individual 401(k)||SEP IRA||SIMPLE IRA|| Safe Harbor
|Profit Sharing Plan|
|Business Type||Businesses with no common-law employees and wanting to maximize contributions.||Any business willing to make all plan contributions and desires simplified plan administration.||Any business with 100 or less employees seeking a mix of employee and employer contributions.||A business that's able to make a required contribution and wants to allow all employees the opportunity to maximize salary deferrals.||A business that doesn't want required employer contributions and owners are not concerned with maximizing their contributions.||Any business willing to make all plan contributions and seeking simplified administration (e.g. no employee contributions).|
|Key benefits||Offers Designated Roth Contributions or pre-tax contributions and loan privileges.||Operate with no annual costs or IRS filing requirements.||Operate with no annual costs or IRS filing requirements.||Allows larger employee contributions due to required employer contributions.||Designated Roth Contributions, automatic enrollment, and automatic increase features available.||Various allocation formulas available for employer contributions. Employer contributions can be subject to vesting schedule.|
|Key benefits (continued)||Similar features to a 401(k) plan.||Designated Roth Contributions, automatic enrollment, and automatic increase features available.||Plan investments are typically directed by employer.|
|Maximum total contributions per participant for tax years 2017|| Employee elective deferral of $18,500 or $24,500 if age 50 or older.
Overall limit of 100% employee's compensation or $55,000 ($61,000 if age 50 or older with catch-up contributions).
|Lesser of $55,000 or 25% of employee's compensation.|| Employee elective deferral limit is $12,500 or $15,500 if age 50 or older.
Employer must make a matching contribution up to 3% of compensation, or a non-elective of 2% of each eligible employee's compensation.
|Employee elective deferral of $18,500 or $24,500 if age 50 or older. Overall limit of 100% employee's compensation or $55,000 (or $61,000 if age 50 or older with catch-up contributions).|| Employee elective deferral of $18,500 or $24,500 if age 50 or older.
Overall limit of 100% employee's compensation or $55,000 (or $61,000 if age 50 or older with catch-up contributions).
|Can there be a vesting schedule?||No||No||No||Yes, on employer contributions.||Yes, on any employer contributions.||Yes|
|Are loans an option?||Yes||No||No||Yes||Yes||Yes|
|Additional plan information||IRS Form 5500 may be required.|| No administrative costs or IRS annual filing requirements.
No employee contributions.
|No administrative costs or IRS annual filing requirements.||IRS Form 5500 required.||IRS Form 5500 required.||IRS Form 5500 Required.|
|Additional plan information (continued)||Annual administration fee required.||Annual administration fee required.||Annual administration fee required.||Annual administration fee required.|
|Investment options||State Farm Mutual Funds||State Farm Mutual Funds or State Farm Annuities||State Farm Mutual Funds||State Farm Mutual Funds||State Farm Mutual Funds||State Farm Mutual Funds, State Farm Bank|
|More info.||Individual 401(k)||SEP IRA||SIMPLE IRA||Safe Harbor 401(k)||Traditional 401(k)|
Investors should carefully consider investment objectives, risk, charge and expenses. This and other important information is contained in the fund prospectuses and summary prospectuses which can be obtained by visiting statefarm.com®. Read it carefully.
Investing involves risk, including potential for loss.
A 10% tax penalty may apply for withdrawals from tax-qualified products before age 59½.
Automatic investment plans do not assure a profit or protect against loss.
Neither State Farm nor its agents provide tax, or legal advice.
It is not possible to invest directly in an index.
State Farm VP Management Corp. is a separate entity from those State Farm entities which provide banking and insurance products.>
BlackRock mutual funds are distributed by BlackRock Investments, LLC (together with its affiliates, “BlackRock”). SFVPMC and its affiliates are not affiliated with BlackRock.
SFVPMC is a separate entity from Capital Research and Management Company (CRMC) which is the investment adviser for the American Funds.
Our firm has a contractual agreement with RBC Correspondent Services (RBC CS) to serve as our clearing firm. This fully disclosed agreement states the responsibilities of each party. Prior to the agreement becoming effective, RBC CS is responsible for making all disclosures to our firm’s designated examining authority as required by NYSE Rule 382. Each client of our firm is notified of the relationship via a disclosure letter. The disclosure letter details the responsibilities that our firm(the introducing broker-dealer) and RBC CS (the clearing firm) have to the client. Although client assets are held by RBC Capital Markets, LLC, Neither RBC Capital Markets, LLC, nor RBC CS has responsibility for the financial condition or performance of our firm or our Financial Advisors.
Ascensus provides recordkeeping for retirement plans offered by State Farm Investment Management Corp.
The Russell 2000® Index tracks the common stock performance of the 2,000 smallest U.S. companies in the Russell 3000 Index.
The Russell 2500 Index measures the performance of the 2,500 smallest securities in the Russell 3000 Index.
The Russell 1000 Index is a market-capitalization weighted index that tracks the largest 1,000 companies in the Russell 3000 Index.
The Russell Midcap Index measures the performance of the mid-cap segment of the U.S. equity market and is a subset of the Russell 1000 Index.
The Dow Jones Industrial Average is an unmanaged average of 30 actively traded stocks.
The NASDAQ Composite is an unmanaged market capitalization weighted index that is designed to represent the performance of the National Market System.
The S&P 500® Index tracks the common stock performance of 500 large U.S. companies.
The Bloomberg Barclays 1-5 Year U.S. Treasury Index measures the performance of short-term U.S. Treasury Securities maturing within one to five years.
The Bloomberg Barclays U.S. Aggregate Bond Index represents debt securities in the U.S. investment grade fixed rate taxable bond market.
The Bloomberg Barclays Municipal Bond Index is an unmanaged index representative of the tax-exempt bond market.
The Bloomberg Barclays High-Yield Bond Index covers the U.S. dollar-denominated, non-investment grade, fixed-rate, taxable corporate bond market.
The Bloomberg Barclays U.S. TIPS Index is an unmanaged index composed of inflation protected securities issued by the U.S. Treasury.
The Citigroup 3-Month Treasury Bill Index is an unmanaged index of three-month Treasury bills.
The FTSE EPRA/NAREIT Developed Real Estate ex-U.S. Index is designed to measure the stock performance of companies engaged in specific real estate activities of the real estate markets outside of the United States.
The FTSE EPRA/NAREIT Developed Real Estate Index is designed to measure the stock performance of companies engaged in specific real estate activities of the North American, European, and Asian real estate markets.
The Morgan Stanley Capital International Europe, Australasia and Far East Free (EAFE® Free) Index currently measures the performance of stock markets of Europe, Australia, New Zealand, and the Far East.
The MSCI All Country World Index (ACWI) is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of developed and emerging markets.
The MSCI All Country World Index (ex-U.S.) (MSCI ACWI ex-U.S. Index) is a free float-adjusted market capitalization index that is designed to measure equity market performance in global developed and emerging markets, excluding the United States.
The MSCI Emerging Markets Index is a float-adjusted market capitalization index designed to measure equity market performance in global emerging markets.
The MSCI Japan Index is designed to measure the performance of the large and mid-cap segments of the Japan market.
The Credit Suisse High Yield Index is designed to mirror the investible universe of the U.S. dollar-denominated high yield debt market.
The New York Stock Exchange is considered the largest equities-based exchange in the world based on total market capitalization of its listed securities.
The Nikkei 225 Index is a price-weighted index comprised of Japan’s top 225 blue-chip companies on the Tokyo Stock Exchange.
The Blended Benchmark for the Equity and Bond Fund is a combination of 60% of the S&P 500 Index and 40% of the Barclays U.S. Aggregate Bond Index, rebalanced monthly.
“S&P 500®” is a trademark of The McGraw-Hill Companies, Inc. and has been licensed for use by the State Farm Mutual Fund Trust. The State Farm S&P 500 Index Fund (the “Fund”) is not sponsored, endorsed, sold or promoted by Standard & Poor’s, and Standard & Poor’s makes no representation regarding the advisability of investing in the Fund.
Russell Investment Group (“Russell”) is the source and owner of the trademarks, service marks and copyrights related to the Russell 2000® Index. Russell® is a trademark of Russell. The State Farm Small Cap Index Fund (the “Fund”) is not sponsored, endorsed, sold or promoted by, nor in any way affiliated with Russell. Russell is not responsible for and has not reviewed the Fund nor any associated literature or publications and Russell makes no representation or warranty, express or implied, as to their accuracy, or completeness, or otherwise.
The EAFE® Free Index is a trademark, service mark and the exclusive property of Morgan Stanley Capital International, Inc. (“MSCI”) and its affiliates and has been licensed for use by the State Farm Mutual Fund Trust (the “Trust”). The State Farm International Index Fund (the “Fund”), based on the EAFE® Free Index, has not been passed on by MSCI as to its legality or suitability, and is not issued, sponsored, endorsed, sold or promoted by MSCI. MSCI makes no warranties and bears no liability with respect to the Fund. MSCI has no responsibility for and does not participate in the management of the Fund assets or sale of the Fund shares. The Trust’s Statement of Additional Information contains a more detailed description of the limited relationship MSCI has with the Trust and the Fund.
Non-Us residents disclosure:
Each of the investment products and services referred to on the State Farm Mutual Funds web site is intended to be made available to customers or prospective customers residing in the United States. The customer's U.S. permanent residence address must be a street address. This web site shall not be considered a solicitation or offering for any investment product or service to any person in any jurisdiction where such solicitation or offer would be unlawful.
Business Continuity Plan Disclosure for State Farm VP Management Corp.
State Farm VP Management Corp. has developed a Business Continuity Plan that governs how we will respond to events that significantly disrupt our business. Since the timing and impact of disasters and disruptions is unpredictable, we will have to be flexible in responding to actual events as they occur. With that in mind, we are providing you with this information on our business continuity plan.
Contacting Us – After a significant business disruption contact your registered State Farm agent or go to our website at statefarm.com®.
Our Business Continuity Plan – We plan to quickly recover and resume business operations as soon as possible after a significant business disruption and respond by safeguarding our employees and property, making a financial and operational assessment, protecting the firm’s books and records, and allowing our customers to transact business. In short, our business continuity plan is designed to permit our firm to resume operations as quickly as possible, given the scope and severity of the significant business disruption. Our business continuity plan addresses: data back-up and recovery; all mission critical systems; financial and operational assessments; alternative communications with customers, employees, and regulators; alternate physical location of employees; critical supplier, contractor, bank and counter-party impact; regulatory reporting; and procedures to help ensure that our customers have prompt access to their funds and securities if we are unable to continue our business. Our business continuity plan may be revised or amended. If changes are made, an updated summary will be promptly posted on our website (statefarm.com) or you may obtain an updated summary by contacting your registered State Farm agent and requesting that a written copy be mailed to you.
Varying Disruptions – Significant business disruptions can vary in their scope, such as only our firm, a single building housing our firm, the business district where our firm is located, the city where we are located, or the whole region. Within each of these areas, the severity of the disruption can also vary from minimal to severe. In a disruption to only our firm or a building housing our firm, we may transfer our operations to a local site when needed and expect to recover and resume business within 1 business day. In a disruption affecting our business district, city, or region, we will transfer our operations to a site outside of the affected area, and expect to recover and resume business within 3 business days. In either situation, we plan to continue in business, transfer operations if necessary, and notify you through our website statefarm.com or your registered State Farm agent. In the unlikely event that the significant business disruption is so severe that it prevents us from remaining in business, our plan provides procedures to help ensure that our customers have prompt access to their funds and securities.
In all of the situations described above, in light of the various types of disruptions that could take place and that every emergency poses unique problems, it may take longer to resume operations during any particular disruption. If you have questions about our business continuity planning, you can contact your registered State Farm agent or by visiting our website at statefarm.com.
Not FDIC Insured
- No Bank Guarantee
- May Lose Value