Where does your Business fit in
Retirement planning?
As a small-business owner, you're keenly aware of how taxes affect your company. They eat
up dollars needed for your company's expansion and operating expenses.
An employee retirement plan is a great way to lessen your tax toll. You may deduct the
contribution you make to the program while providing valuable benefits to your employees.
There are many options to accumulate retirement income above and beyond Social Security,
All of these programs can be funded with life insurance policies, mutual funds, or annuity
contracts. You choose how your program is structured.
A Qualified Retirement Plan (i.e.: 401(k), Money Purchase,
Defined Benefit, Target Benefit, Comparability, Profit Sharing Plan,etc ) is an effective
way to reduce your current tax liability while saving for retirement. When you incorporate
a qualified retirement plan into your employee benefit program, you, your business and
your employees benefit.
A qualified plan may offer you, your business and your employees these tax benefits:
 | Employer contributions are tax-deductible to your business. |
| Contributions aren't included in your or your employees' current incomes. They are taxed when they're distributed - generally at retirement when income tax brackets are often lower. |
| Tax deferral. You and your employees accumulate contributions and earnings on those contributions without paying taxes on them each year. This allows retirement savings to grow more quickly than through conventional savings programs. |
| Annual administrative expenses paid separately by your business are tax-deductible. |
If you would like more details on Qualified Retirement Plans please click here--->
A Nonqualified Retirement Program allows you to pick and choose
who participates in the program. Programs can be funded with employer contributions,
employee contributions or a combination of both. Tax Deductions are not usually allowed by
the employer until the funds are paid to the employee
A Voluntary Deferred Compensation Program
allows you to defer a portion of yours or an employee's salary for receipt at a later
date, usually at retirement. Unlike qualified plans, there are not limits on the amount of
income that may be deferred. When the funds are paid out, the business will receive an
income tax deduction, and the money will be taxed as ordinary income to the employee.
A Selective Executive Retirement Plan (SERP) is funded with
employer contributions. In a SERP, the employer promises to pay the employee a specified
amount of income at retirement. The amount of income may be subject to some conditions,
such as the employee staying with the employer a certain number of years or until
retirement.
The amount of income provided by a SERP may be based on a percentage of final pay, average
pay or a flat dollar amount. It may be determined by using a formula based on the number
of years the employee works for the business.
As with the Voluntary Deferred Compensation Program, contributions to a SERP are not
immediately deductible. Retirement payments made to an employee who is a participant in an
employer-sponsored retirement plan are deductible when paid.
These programs can be funded with life insurance policies, mutual funds, or annuity
contracts. You choose how your program is structured.
