Education Videos Only

Maximizing a Business Owner’s Retirement Benefit

Once you’re ready to really get going on saving for your retirement, we can suggest a number of retirement plan designs and individual plan features that can help you reach your goals.

It’s a common story – business owners put everything into their businesses for years before being in a financial position to put real money away for retirement. Once you’re ready to really get going, we can suggest a number of retirement plan designs and individual plan features that can help you reach your goals. Depending on your situation, here’s a quick snapshot of some of the most popular:

First, a 401(k) plan with a Safe Harbor feature can be a great vehicle. With this plan, you can make significant contributions as long as the rank and file are guaranteed a meaningful base contribution. The safe harbor is a free pass on the testing that is otherwise required to demonstrate adequate coverage and fairness.

For some business owners, an Age Weighted plan design can be advantageous because, as its name implies, it takes the age of employees into consideration when calculating annual contributions. This can be especially helpful if owners are older and your workforce is relatively younger as the contribution calculations favor those closer to retirement.

A traditional Defined Benefit plan can also work to your advantage as it’s meant to guarantee a promised benefit at retirement and is calculated to contribute to fund that liability. DB plans permit much higher annual contributions than 401(k) type plans, but it’s important to note that annual contributions to fund their results are mandatory, not discretionary.

A Cash Balance plan is something of a hybrid. It’s has the mandatory provisions of a Defined Benefit plan, but provides an accumulated balance like a Defined Contribution plan – rather than a promised benefit at retirement. It, too, allows you to save much more than is possible under a 401(k) or Profit Sharing plan.

And one more popular idea is the pairing of a 401(k) with a Cash Balance plan. This provides the opportunity for rank and file employees to participate while giving you a more generous savings path.

And don’t forget, the IRS provides all employees over the age of 50 the opportunity to make what are called catch up contributions. This might be the best named featured ever as it truly means that you can catch up for years when you were building your business or raising a family and weren’t able to put away enough for retirement. Catch up contributions raise the annual deferral limit for older savers.

We have many tools in our arsenal and you can count on us to work with you to create a custom approach to help you optimize your path to long-term financial success.

Disclaimer: Please note that the material presented is for informational purposes only, is general in nature, and is not intended to and should not be relied upon or construed as legal, financial, or investment advice regarding any specific issue or factual circumstance. Reproduction, copying, or distribution of these materials is prohibited without the express written permission of GSM. The information is presented “as is” without warranty of any kind, either express or implied, including without limitation, warranties of merchantability, or fitness for a particular purpose. Your use of this material is at your own risk and GSM assumes no liability or responsibility for any errors or omissions in the content. Although every reasonable effort is made to present current and accurate information, GSM makes no guarantees of any kind and cannot be held liable for any outdated or incorrect information. Under no circumstances shall GSM be liable to you or any other person for damages of any amount or character arising from your access to, or use of, this material.