Retirement Plans

2013 Update: Pinnacle now has a Multi-Employer 401(k) plan available with an approved Plan Document. Pinnacle clients can add a 401(k) option without any cost to the client. The Pinnacle Benefits Department will help you get set up. See these links:

A 401(k) has a few advantages compared to other types of retirement plans. The owner can decide how much matching to do, if any. There is an option for a vesting schedule where the company match is assigned to employees over several years. There is also some flexibility is the rules for eligibility and enrollment times.
Several owners have inquired, in the past, about offering a 401(k) plan to their stylists and managers. Pinnacle's literature does not include information on a standard retirement plan, so you might assume none are available. The issue is that each owner may have different reasons for offering a retirement plan, and the structure of the plan can vary based on the owner's needs.

There are several types of retirement plans possible under Pinnacle. Generally 401(k) plans make sense for a business owner when the following characteristics are in place: An employee wants to invest over $10,000/year, there will be participation by several employees, and the owner has an interest in providing matching contributions over a long period of time under a gradual vesting program. Under these conditions, setting up a new 401(k) plan for your location is justified.

A more common scenario is an owner who has one or two employees interested in a retirement plan. These employees may wish to invest $50-$100 out of each paycheck, which would total possibly $1300-$2600 annually. Or perhaps the owner wants to provide a small incentive as a reward for employees. With a low volume of investment dollars, and only a couple participants, the 401(k) option may be impractical because of the administrative requirements and the time involved.

Thus, in addition to the standard 401(k) plan, Pinnacle has other retirement plan options that fit the salon industry. Another choice available is the Traditional IRA. Under this arrangement, employees have a payroll deduction for an IRA retirement fund. Pinnacle takes the payroll deductions and forwards the money to the administrator. Employees can invest up to the annual IRA maximum.

Another choice is the SIMPLE IRA, which is a simpler approach than a 401(k), and is designed for smaller employers. Under a SIMPLE, employees can invest money out of their paychecks on a pre-tax basis in amounts of at least $5,000/year. The owner provides a small amount of matching funds to encourage participation. But unlike the 401(k), a SIMPLE has fewer administrative requirements.

For further information on these programs, contact your account representative or the Benefits Department at Pinnacle at (210) 344-2088