Non-Qualified Retirement Plans
Specially designed non-qualified plans can offer a reduction in income taxes
As Ben Franklin famously noted, “In this world nothing can be said to be certain, except death and taxes.” Although the adage is old, we believe it applies more than ever to today’s tax environment.
Retirement plan companies have for long been offering retirement income planning as a way to mitigate taxes but for many it has become a difficult strategy to take advantage of.
Many employers find themselves unable to sponsor a traditional retirement plan due to having too large a staff. For these entrepreneurs, the traditional tax saving strategies being presented do not provide sufficient savings to justify starting the plan.
What is the savvy business owner to do?
Consider starting an owner-focused non-qualified plan.
- First, a business owner centric plan can reduce taxable income as contributions may be tax deductible and lower taxable income providing 30-40% on the dollar savings. Not too shabby…
- Second, the assets inside of your plan may grow in a tax-deferred manner
- Third, employees do not need to be included in this plan. Yes, employees are valuable and they need to be compensated properly, but they do not necessarily always have to share in every piece of the pie.
- These strategies are highly customizable. In other words, each owner in the business can choose to participate or not. It allows everyone to achieve their specific investment goals without tying down their partners.
- Finally, in many of the plans life insurance is featured creating a death benefit that can be used to fund buy/sell agreements. Not only are you providing for yourself but also for your family in case the unimaginable happens.
More words of wisdom from the long-gone Mr. Franklin, “A penny saved is a penny earned,” and realize that this fact is true only if you get to keep that penny for yourself or your family.