Today we review the different Qualified Plan Options available to a small business owner, specifically in this instance an employer with under 100 employees. We review what a 401(k) plan, with various match formulas including the two safe harbor options looks like from a cost / benefit perspective. We also review a Simple 401(k) option as well as a Simplified Employee Pension, also known as a SEP.
For this client we were reviewing what percent of the total plan contribution he could get in his “retirement pocket” and also reviewing the return on his investment at retirement. In other words for every dollar he spends on the retirement plan what is the OWNER’s return at retirement.
Our firm works in the retirement plan space as well as risk management on a number of different fronts. If you have interests in commercial property and casualty insurance, retirement plans, life insurance for yourself or your key employee’s, disability insurance, Long Term Care insurance, or group health insurance we are glad to discuss options with you.
We also have some strategies that can help you avoid the Ordinary Income taxes you will owe on any proceeds you have coming out of an annuity, let us show you how to go from paying 20-36% of those proceeds in taxes, to potentially paying 0%.
My name is Ken Smith and I can be reached at KenSmithAdvisor@icloud.com or 972 816 5367
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LEARN MORE ABOUT: Qualified Retirement Plans
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Great information for the small business owners out there that very rarely think of themselves and focus on generating income and jobs for their employees. The owners usually keep putting it off saying “I’m going to eventually get to that…”
A second tier to this planning is that most small business owners business is a pass-through entity (partnership, S-corporation) as far as taxation is concerned and will need to understand how much the “employer match” (amount that can be expensed as employee benefits) to a retirement plan helps them tax-wise. So ultimately, they will have to juggle how much they can contribute for themselves (compensation deferral and the employee match) and their applicable tax rate they are paying on their income at the individual-level. Your analogies and comparisons are perfect to be able to use the employee match amount for a business deduction and prepare the individual tax-planning/liability based on those amounts.
Look forward to the next video(s).