Are you a successful realtor operating as an independent contractor? Ok. Here’s how to save $38,000 in taxes this year.
Do you fit this profile?
- Self-employed or small business owner with up to five employees
- 40 years of age or older
- Willing and able to contribute more than $50,000 annually to a qualified retirement plan and continue this level of funding for at least 3 years
By opening and funding an IRS-approved qualified retirement plan called a small business defined benefit (DB) plan, a business owner or independent professional may be able to make tax-deductible contributions to the plan in excess of $100,000 per year and thereby save $38,000 or more in taxes each year.
Defined benefit plans offer by far the highest tax-deductible contribution potential. See chart below:
Defined benefit plans enable the self-employed to build a large retirement nest egg in a very short time. DB plan owners can accumulate as much as $1,000,000 to $2,000,000 in a tax-deferred retirement account in just 5-10 years. Once a defined benefit plan is funded to the IRS limit of $2.36 million, the plan assets can simply be rolled into a regular IRA.
It is not just realtors that stand to benefit, however. Here is a list of the typical professions of people who have defined benefit plans:
- Architects
- Attorneys
- Consultants
- Contractors
- Independent Corporate Directors
- Dentists
- Doctors
- Entrepreneurs
- Graphic Designers
- Independent Insurance Agents
- Manufacturer’s Reps
- Mortgage Brokers
- Real Estate Agents
- Software Developers
DB plans enjoy several powerful features:
- Highest allowable contributions to a qualified retirement plan: $100,000+ (much higher than the contribution limits on SEP-IRAs and 401(k)s.
- Annual tax savings of $38,000 or more
- Investments grow tax-deferred, building wealth faster
- Tax-free rollover to an IRA at retirement (or plan termination)
- Flexible range of investment choices
Defined benefit plans are not appropriate for everyone, but for those in the right circumstances they can provide large tax savings and a very fast way to “catch-up” on amassing a substantial retirement nest egg.
Deadline to Establish a DB Plan for 2015 is Approaching
A defined benefit must be established before the end of the tax year for which contributions will be made. For most people and companies the date is December 31, 2015.
We would be pleased to generate a complimentary proposal for you if you would like to see how much you could save in taxes by establishing a defined benefit plan. Please click here to use our Free Tax Savings Analysis tool. Alternatively, you can call us at 619-435-1701 or email us at: [email protected]
To learn more about how we manage client portfolios, please visit us at www.orionportfolios.com
