| Client: |
Rocking Horse Daycare* |
Business:
Employees:
Ownership: |
Local daycare center, six-month-olds to pre-schoolers
5 part-time teachers (30 hrs/wk), 2 spouses
5 years, by partners Sue Ames, CJ Jones, Raye Kepp |
Situation: |
Partners Sue, Raye and CJ are in a bind. They've built their success on the continuity of teaching staff, which is important to the parents of the children in their care. Although the daycare center is bursting at the seams with current enrollment, the perfect next location won't be available to lease for another 2 years. In their competitive market, the partners can't afford to increase daycare tuition enough to give more than minimal raises to their teachers. Offering retirement benefits is the best answer.
A 401(k) plan, though the teachers would be eligible, feels like it would add undue burden to the payroll administration they currently do in-house. Would the added cost be worth the investment? |
Solution: |
ADP SIMPLE IRA
For business owners with no more than 100 employees, who received at least $5,000 in compensation for the preceding year.
Less administration and government reporting than a 401(k), with no participation requirements. Easy to convert to a 401(k) plan.
Coupled with ADP Payroll services to save time and money while assuring accuracy in recordkeeping. |
Value Added: |
- Savings for employers through tax-deductible matching contributions and tax credit of $1,500 (over three years) for establishing the plan.
- Easy way for employees to save for retirement through payroll deductions (ADP Payroll clients).
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* This case study is presented for illustrative purposes only. The hypothetical situation above represents a composite of the typical challenges that face many of ADP’s clients for this product. All client and company names are fictitious and any relation to actual names is coincidental and is not intentional.
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