Business owners have more options when it comes to implementing pension plans for themselves and their employees. The key is choosing one that is best for all interested parties. The following are options a business can choose to use (some you’ll be familiar with and some you most likely will not).

A combo plan (a mix of two or more of the following) will typically be the best way for business owners to put away the maximum for themselves and the minimum for employees. That is not always the goal of employers, but many times in a small business setting that is the case.

If you would like to have your current pension plan design reviewed and/or would like to discuss how we can help you design a more efficient and cost effective plan for your business, email support@aswealthmanagement.com to schedule a call or an in-person meeting.

• 401(k) Plans—these are employee-sponsored plans where employees can make voluntary payroll deductions in a tax-deferred manner.
• Roth IRAs and 401(k) Plans—these are after-tax versions of the deductible kind where the money is allowed to grow tax-free and come out tax-free.
• Profit-Sharing Plans (PSPs)—these are plans employers can choose to put in place where the employer makes the contribution. There are three different kinds of PSPs employers will use depending on their goals.
• Defined Benefit (DB) Plans— these are not only funded by employers for their employees, but the employer is guaranteeing a certain retirement income for vested employees at retirement. DB plans allow for much larger deductions typically than 401(k) or profit-sharing plans.
• 412(e)3 Defined Benefit Plans—these plans are fully insured plans using annuities and/or life insurance. The deductions are typically larger than traditional DB Plans, but even less flexible tools.
• Cash Balance Plans—these are a type of defined benefit plan with more flexibility than defined benefits.
• 401(h) Plans—this is the only “tax-free” qualified retirement plan. Money goes in tax-deductible and money can come out tax-free.  401(h) plans are a type of defined benefit plan.
• Captive Insurance Companies (CIC)—for business owners who generate $1 million or more in revenue that is not needed to pay personal living expenses, a CIC can be a tremendous business risk mitigation tool and one that has very unique tax-benefits not offered elsewhere.