Small Business Retirement Plan
Focusing on Self Employed Business Owners
Courtesy of Jason Washo, CPA
For 2006 an Individual 401(k) can provide a tax shelter for $44,000 ($49,000 if you are 50 or over) of your taxable income. The Owner(k) will allow you to convert taxable income into a tax deduction. It will also provide you with tax deferred compounding for your investment dollars.
One of the most important benefits of a small business retirement plan is tax-deferred growth for your savings. Because you don't pay taxes on your earnings until you withdraw money at retirement, every dollar contributed works to earn interest. Over time that really adds up. Tax deferral maximizes the benefits of compounding so the sooner you begin the more you'll have at retirement. If you have not yet considered a Small Business Retirement Plan, contact Jason Washo today for professional consultant.
Tax credits for new small business retirement plans covering employees: Employers who have never offered a business retirement plan, or have not offered one for more than three years, will be eligible for tax credits of 50 percent of the first $1,000 of plan administrative expenses. The business owner will be able to use this credit for three years in addition to the business deduction for employer contributions.
Owner(k) allows:
- Lower income levels while allowing the maximum deduction
- Flexibility for timing and amount of contributions
- Investment options including stocks, bonds, mutual funds, CD's, REIT's, and more
- Borrowing from your business retirement plan
- Businesses with owners only: includes partners and coverage for spouses
- Easy and affordable set-up: only $50 set-up and $35 per participant
Other small business retirement plan or business retirement plan that may work for you are:
- Traditional 401(k)
- Safe Harbor 401(k)
- Traditional and ROTH IRA's
- SIMPLE (Savings Incentive Match Plan for Employees)
- SEP (Simplified Employee Pension)
- Profit Sharing Plans
- Money Purchase Pension
- Defined Benefit
Determining which business retirement plan will work best for your situation can be complicated and should not be done without consulting a professional. If you are self-employed, have business partners, or one to ten thousand employees; we have a small business retirement plan that will work for you. If you are interested in determining which business retirement plan is best for you, please contact me at www.washofinancial.com
About Jason Washo
Jason is an an active Arizona CPA, PFS; Series 7, 24 and 63 securities licensed, and has an Arizona Life and Health Insurance license.