Small Employer Consulting

BRC provides pension plan design and actuarial services to small employers and self-employed individuals who wish maximize both tax deductions and retirement income.

Businesses that adopt a traditional defined benefit pension plan (DB) or a combination of a defined benefit and defined contribution plan (DB/DC) can realize substantial tax-deductible retirement contributions and significant future retirement income. Depending on the age and income of the business owner or owners, annual contributions can easily exceed $150,000 per owner.

Generally, these arrangements are appropriate for a business owner or owners who are age 40 or older and would like to make tax-deductible contributions in excess of the maximum limits of a 401(k) or other defined contribution arrangement, currently $56,000. In addition, this type of arrangement may be an ideal choice is for a dual income household where one spouse is self-employed. A substantial tax deduction could be realized by contributing a significant portion the self-employed spouse’s income into a DB or DB/DC arrangement.

Some of the key benefits of adopting a DB or DB/DC combination plan are:

  • Potential annual tax-deductible contributions in excess of $150,000
  • Rapid accumulation and tax-deferred growth of plan assets
  • Creditor protection of plan assets
  • Flexible investment options

The following example demonstrates the potential federal income tax deferral that can be realized by adopting a DB/DC combination plan:

Current age of business owner: 44
Assumed retirement age:62
Annual compensation:$300,000
Defined benefit plan contribution:$120,000
Maximum 401(k) deferral:$19,000
Profit sharing contribution:$16,800
Total tax-deductible contributions:$155,800
Estimated annual tax deferral based on 35% marginal tax rate:$54,530

Potential occupations that might be suitable for and DB or DB/DC combination plan are:

  • Architect
  • Attorney
  • Consultant
  • Contractor
  • Dentist
  • Engineer
  • Entrepreneur
  • Financial Planner
  • Independent Corporate Director
  • Independent Insurance Agent
  • Mortgage Broker
  • Physician
  • Real Estate Agent

Please contact us for additional information and for preparation of a customized proposal.

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