Maximizing a Business Owner’s Retirement Benefit

Business owners often invest heavily in their businesses before being in a financial position to contribute significantly to retirement. When you’re ready to prioritize retirement savings, we can recommend several retirement plan designs tailored to your goals. Here’s a look at some popular options:

401(k) Plan with Safe Harbor

A 401(k) plan with a Safe Harbor feature allows you to make larger contributions without testing requirements, as long as base contributions are made to rank-and-file employees. This helps ensure compliance and allows for maximum contribution benefits.

Age-Weighted Plan Design

This plan considers employees’ ages, allowing higher contributions for older employees. It’s advantageous if you’re an older business owner with a younger workforce, as it allows higher contributions closer to retirement.

Defined Benefit Plan

Defined Benefit (DB) plans offer a promised benefit at retirement, requiring higher contributions to fund future benefits. DB plans enable larger contributions than 401(k) plans but have mandatory annual funding requirements.

Cash Balance Plan

Cash Balance plans blend features of DB and Defined Contribution (DC) plans, providing an accumulated balance rather than a promised benefit. Like DB plans, Cash Balance plans allow for higher contributions but have required annual funding.

Combining 401(k) with Cash Balance Plan

Pairing a 401(k) with a Cash Balance plan offers both employee participation and higher savings potential for the business owner, creating a balanced approach to retirement savings.

Catch-Up Contributions

For business owners over 50, catch-up contributions allow you to contribute additional funds, helping you make up for years when retirement savings were secondary to business growth.

We have a wealth of retirement plan tools and can work with you to create a custom approach that maximizes your retirement savings. Reach out to explore how we can support your path to long-term financial success.