Qualified Plan Strategies

Business owners and self-employed individuals have access to retirement plan structures that can significantly increase tax-deferred savings beyond traditional employee contribution limits.

Defined Contribution Plans

• 401(k) Plans:Employee deferrals plus employer matching and profit sharing contributions

• SEP-IRAs:Employer contributions up to 25% of compensation with simplified administration

• SIMPLE IRAs:Lower contribution limits but easier setup for small businesses

Defined Benefit Plans

Traditional defined benefit and cash balance plans can allow substantially higher contributions, particularly for older business owners with consistent high income. Key considerations include:

• Actuarially determined contribution requirements

• Funding obligations regardless of business performance

• Coverage and discrimination testing requirements

• Administrative complexity and costs

Plan Design Considerations

The optimal plan structure depends on factors including age, income stability, workforce composition, and long-term business plans. Combining multiple plan types may maximize benefits while managing costs.

Tax outcomes depend on facts and circumstances. This content is for educational purposes only and does not constitute tax advice. Consult a qualified tax professional for guidance specific to your situation.