We've discussed age-weighted profit-sharing plans designed to provide older business owners with the lion’s share of the firm’s retirement plan benefits. But there’s another alternative.
Strategy: Consider a “new comparability plan” for your small business. This version of a qualified plan further skews contributions in favor of highly paid employees.
Here’s the whole story: The basic objective for many retirement-savers is to sock away as much as they can in as short a time as they can. This is especially important to older entrepreneurs. However, due to the strict nondiscrimination rules in the tax law, a company generally can’t favor highly compensated employees (HCEs) over non-HCEs (see below).
That’s where a new comparability plan can come to the rescue. Under this “cross-tested plan,” employer contributions are allocated based on a formula established in the plan document. Generally, plan participants are divided into ...(register to read more)
- Small Business Tax Deduction Strategies No matches