Introduction to Qualified Plans

The establishment of a qualified retirement plan is the perfect vehicle to save tax-deferred for retirement. By listening to information about ERISA, the Pension Protection Act of 2006, and other topics related to qualified plans you will begin to understand that these plans will work for individuals who are in business for themselves as well as those with anywhere from two to hundreds of employees. With the responsibility of saving for retirement shifting from employer only funded to predominately employee funded plans, qualified retirement plans allow for higher tax-deferral and deductible limits in virtually all types of plans over those available in traditional IRA's.

Qualified Retirement Plan design is what will determine how much can be deferred from a tax liability perspective. Entity type, such as C-corp, S-corp, LLC, and partnerships, how compensation is derived and a review of the demographics of employees are important factors in determining the type of plan to open. Contribution limits in defined contribution plans can exist up to $49,000 per year and in defined benefit plans, the limit is equal to the funding requirement based on the actuarial calculations which could be far more than $49,000. Individual contributions, commonly known as deferrals, are limited to $16,500 (under 50 years of age) in a combined environment for all plans available to that individual.

Individual and small business owners are perfect prospects for qualified retirement plans. Historic biases towards the expense of establishing and maintaining these kinds of plans have been relinquished due to the vast amount of information that is available allowing for a true cost/benefit analysis in favor of the establishment and funding of these kinds of plans.

Susan Hajek offers securities through Resource Horizons Group, L.L.C., Member FINRA/SIPC.
1350 Church Street Ext. NE, 3rd Floor, Marietta, GA 30060. Telephone 770-319-1970.
Resource Horizons Group, L.L.C. and Brokers Alliance, Inc. are not affiliated.