OVERVIEW
Retirement Planning involves setting retirement income
and funding goals, selecting plans and programs to accumulate
retirement savings, selecting investment strategies and
selecting retirement distribution strategies. We will
work with you to design a retirement plan strategy that
meets your needs. Plan sponsors of 401(k) plans and profit
share plans have fiduciary responsibilities to manage
costs and provide appropriate investment choices for their
plan participants. We work with the plan sponsors to insure
that they meet all their obligations.
What Are My Retirement Planning Options?
There are a variety of retirement planning options that
can meet your needs. Your employer funds some; you fund
some. Bear in mind that in most cases, withdrawals made
before age 59 are subject to a 10 percent penalty, and
withdrawals usually must begin by April 1 of the year
after you turn age 70. Income taxes are also due upon
withdrawal in most cases. This list describes 5 of the
most common options.
Of all the retirement planning options that are available,
Group 401(k) plans are one of the best programs for accumulating
retirement funds. Unlike a taxable savings vehicle, a
401(k) plan allows you to make annual pre-tax contributions
of up to $15,500 in 2007. With company match annual deferrals
of up to $45,000 are allowed. Those 50 and older can contribute
up to $20,500 of pre-tax deferrals. Plan sponsors have
fiduciary responsibilities to manage costs and provide
appropriate investment choices for their plan participants.
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A low cost 401(k) plan for the self- employed can be
set up with the same contribution limits as group plans.
This increases the deferral amounts that a self-employed
owner can contribute over and above IRAs. They are structured
to minimize the administration costs of 401(k) plans.
Upon termination these funds can be rolled into IRAs.
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A profit sharing plan is funded by your employer with
employee contributions usually optional. Upon your retirement,
you will normally receive your benefit as a lump sum that
can be rolled over into an IRA. The company's contributions
usually depend on the company's profits. If a profit-sharing
plan is set up as a 401(k) plan, employee contributions
may be tax deductible. Plan sponsors have fiduciary responsibilities
to manage costs and provide appropriate investment choices
for their plan participants.
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A defined benefit plan normally provides a specific
monthly benefit from the time you retire until you die.
This monthly benefit is usually a percentage of your final
salary multiplied by the number of years you've been with
the company. Defined benefit plans are usually funded
completely by your employer. Traditionally these plans
were usually only offered by large companies. Today, they
can be a great source of retirement funding for successful
small business owners because owners over the age of 45
can contribute in excess of $100,000 tax deferred each
year.
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In Employee stock ownership plans (ESOP), an employer
periodically contributes company stock toward an employee's
retirement plan. Upon retirement, employee stock ownership
plans may provide a single payment of stock shares. ESOPs
provide a great way for owners to transfer the ownership
of the company to its managers over time. They often provide
a method for the owner to diversify his wealth prior to
retirement or business exit.
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