Many successful companies (especially professional firms like medical groups and law firms) are considering whether to increase retirement plandeductions for 2011. This post highlights the action steps to take while there’s still time.Note: We’ll be focusing on cross-tested profit sharing plans and cash balance plans. These plans allow owners to make large tax-deferred retirement contributions in exchange for providing a generous employee retirement allocation (usually 5% of pay if there’s only a profit sharing plan, or 7.5% of pay if there’s a cash balance plan too).
Since the Pension Protection Act of 2006 there are numerous alternatives for deducting beyond the defined contribution limits. This can be a win win for both the employer and their employees.
Please comment or call to discuss how these hybrid plans might work for your company.
- Retirement Plans (moneymanager.com)
- Employees Want a More Pension Fund Like Plan. (401kplanadvisors.com)
- Retirement Rules for Small Business Clients (401kplanadvisors.com)