Retirement Plan for Nannies
GTM Payroll Services offers a retirement plan for nannies and other household employees. This is a plan exclusive to household employers that you will not find anywhere else.
Our SIMPLE 401(k) Plan not only gives you a recruiting and retention advantage over other families without retirement options, but it also helps your employee build an excellent source of retirement income and experience the benefits of tax-deferred growth.
Features and Benefits of a Retirement Plan for Nannies
Features and benefits effective January 1, 2023:
Designed for household employers
A SIMPLE 401(k) plan is perfect for families with household help. Domestic workers – like nannies, housekeepers, senior caregivers, and others – provide personal services to the family and can not be added to a retirement plan offered to business employees through their company or sole proprietorship.
Household employees have the potential for pre-tax savings via payroll deferral of up to $15,500; those 50+ years old can defer another $3,500 as a catch-up contribution.
Roth 401(k) deferrals are allowed. Employees will pay income taxes on the deferred contribution. In most cases, however, the earnings are not subject to income taxes upon distribution.
Household employees have the option to modify deferral amounts.
The employer must make mandatory contributions on a dollar-for-dollar match basis of up to three percent of the employee’s gross pay, which can be used to reward and retain valuable household workers.
Money that is contributed to an account by an employer and their worker is always 100 percent vested. Vesting refers to an employee’s “ownership” of their plan benefits.
Self-direction of investments
Household employees have the ability to self-direct their investments from a list of monitored, low-cost mutual funds. There are no restrictions on making changes and no commissions are assessed. Advisors are available to help counsel employees and understand investment options in the plan that may be suitable for them.
Once a household employer adopts a plan, their worker can enroll online choosing the amount they wish to defer and how they would like to invest their contributions.
Household employees have access to fiduciary financial advisors who can provide them with professional fund management and one-on-one advice. A fiduciary is an individual who will act in the best interest of the employee by buying and selling investments that are the best fit for the employee and avoiding conflicts of interest.
If the household employee changes families and their new family uses GTM Payroll Services, that family can adopt the plan and continue 401(k) contributions OR the employee can roll their money into another qualified retirement plan or individual retirement account (IRA). Employees will always be 100 percent vested in their rollover account. Assistance is available for any employee who wishes to roll over their account.
Household Employee Benefits & Insurance
- Health Insurance
- Dental & Vision Benefits
- Small Employer HRAs (QSEHRA)
- Individual Coverage HRAs (ICHRA)
- Health Reimbursement Arrangements (HRA)
- Flexible Spending Accounts (FSA)
- Retirement Plan
- Workers' Compensation Insurance
- Travel Insurance
- Employee Dishonesty Insurance
- Additional Insurance Options
Talk to an Expert
Our experts are available to discuss your needs and help you get started with a retirement plan for your household employees.