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Secure tax-free health perks in retirement with a 401(h) plan

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in Small Business Tax

All the talk about health care reform may have you thinking: How can you pay for ever-rising medical expenses when you’re no longer working? Even a sizable pension can be quickly drained.

One practical solution seems to have flown under the radar.

Strategy: Set up a Section 401(h) plan. This little-noticed arrangement pays for costs associated with the sickness, accident, hospitalization and medical expenses of retired employees, their spouses and their dependents.

Distributions used for qualified purposes are completely tax-free to plan participants. This can enable you to save tens of thousands of dollars over time.

Here’s the whole story:
Small business owners can prepare for the future by establishing a qualified retirement plan. For example, you may have started a defined benefit plan, like a traditional pension plan, years ago. As with other qualified plans, the pension plan is subject to tax-law limits. For 2010, contrib...(register to read more)

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