Molduras SorocabaBizOpBlogsEthanol BusinessAcademia de Inglês 24h© FranchiseTalk

How To Create Your Own Pension Plan

Classic retirement plans are an intriguing option for shielding small-business income from the IRS.

retirement-plan.jpg

CNNMoney:
Like many successful business owners, Bob Johnson, founder and CEO of Johnson Insurance & Financial in McKinney, Texas, was hungry for juicy tax breaks. He found some – more than $200,000 in just 3 years – in an unlikely place: the old-fashioned defined-benefit pension plan.

‘It’s amazing how much you can save, and it gives you a great tax deduction,’ he says.

Johnson, 65, has been running a thriving financial services business for 35 years, generating net income of about $500,000 a year. He faithfully maxed out annual contributions to his SEP retirement plan, but three years ago he looked at his tax bill and wondered if there wasn’t a better way.

‘If you’re making $500,000 a year and contributing $40,000 to a SEP [the maximum in 2004], you still have $460,000 of net income on which you have to pay 35% tax,’ says Johnson.

It was another financial advisor who pointed him to a defined-benefit pension plan. These classic pensions have long been associated with large corporations – and in the age of 401(k)s they have become an increasingly rare perk. But recent regulatory changes have made them much friendlier for the small-business owner.

And here’s the kicker: High earners who are 45 and older are often able to sock away much larger sums than with defined-contribution plans such as IRAs, SEPs, or solo 401(k)s. Read on…

Share and Enjoy:
  • Print
  • Digg
  • Sphinn
  • del.icio.us
  • Facebook
  • Mixx
  • Google Bookmarks
  • Blogplay

Also Read

  1. What’s Your Swine Flu Game Plan? With swine flu expected to affect one in three people...

2 Responses to “How To Create Your Own Pension Plan”

  • BillyJack says:

    Very interesting! It just goes to show even with all the innovations in the world of finance, some of the old financial strategies still work! Thanks for sharing!

Leave a reply

* Apply for your short term flexible loans online. No driving to the store, no waiting in line to get personal loan.

* Introductory information about better trades is offered through a bettertrades event known as the Financial Freedom Expo.

Welcome Visitor(s)
  • 17 online
  • Add to Technorati Favorites
    Recent Posts

    How To Make Money From Facebook

    FranchiseKey: Do you ever get the feeling you are missing out? Currently, there is so much talk about... 

    Ways To Work From Home

    6abc.com: eJuror If you don’t mind being called up for “jury duty” then working as... 

    How To Make Your First Business Grow

    Forbes.com: One of his former students is selling genetically altered glow-in-the-dark goldfish. Another... 

    Women Entrepreneurs And Maternity Leave

    Current Mom: So often, women become entrepreneurs for the freedom it gives to control your own schedule... 

    Cash Flow And Accounting For Entrepreneurs

    DO’S 1. Learn basic accounting before you go into business. Go to school if necessary. 2.... 

    Comments
    bom dia , estou querendo montar uma loja de presentes e cama e mesa e banho juntos , so que estou meia perdida nao sei por onde come
    Good tips. Maintaining and updating your cash flow monthly is extremely important, especially since it is a new business, and you ha
    Thanks for your article.I'm planning to learn many methods to make money with supporting outsourcing services. Outsourcing Services,
    I agree that technology has levelled the playing field and with applications like Skype, this even save money for entrepreneurs thro
    Great post, great advice. Once you have outgrown doing the books yourself (hopefully with good accounting counsel from the beginning
    CATEGORIES

    Ethanol BusinessFranchise TalkBizOp Blogs