“In the game of retirement planning, there is no hole in one. However, adding a QRP can help your business recruit, retain and reward employees.”
Here’s how professional golfer Doug Sanders once described his retirement plan: “I’m working as hard as I can to get my life and my cash to run out at the same time. If I can just die after lunch Tuesday, everything will be perfect.”
It’ll grab some laughs at the 19th hole, but for many Americans, it’s the plan they have in place—and that’s no laughing matter. As a business owner, how can you build a plan to provide yourself, your partners and your employees with a comfortable retirement?
There are two main types of employer-sponsored retirement plans: qualified retirement plans (QRPs) and non-qualified plans. This article will focus on QRPs.
As a business owner, what are
- You can use the plan to save for your own retirement
on a pretax basis.
- Contributions for employees are
- Plan assets grow tax-deferred and
are affordedgreater creditor protection.
- A good retirement plan can help your business recruit,
retainand reward employees.
In contrast, a DB plan customarily promises a specified monthly benefit at retirement. More commonly, it may calculate a benefit through a formula that considers such factors as an employees’s compensation and years of service.
Two common types of DC plans are 401(k) plans and profit-sharing plans (PSP). For 2019, annual 401(k) contributions
Profit-sharing plans allow employers to make discretionary contributions depending on profits. There are different allocation formulas that can
A cash balance plan is a DB plan that supplements a 401(k) and PSP with substantially larger contributions and associated tax savings. At retirement, employees can either take the lump sum or elect an annuity for monthly payments. Cash balance plans have gained popularity, due mainly to their flexibility and their potential for much larger tax-deductible contributions. It is not uncommon for the owner’s maximum allowable plan contributions to be
In the game of retirement planning, there is no hole in one. However, by adding a QRP to your business, you will get a tax-favored funding vehicle that can provide meaningful tax deductions today and additional financial security