By Peter C. Thoms, CFA
www.orionportfolios.com
Are you frustrated with the taxes you paid in 2014? Would you like a way to save more for retirement while paying less in taxes? If you are a small business owner or high income independent professional, you may have powerful tax-reducing options available to you.
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 $40,000 or more in taxes each 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
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.
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 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.
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. Click here for our Free Tax Savings Analysis to begin. Alternatively, you can call us at 619-435-1701 or email: [email protected]
