Retirement Planning and the “One-Man Band”

If you’re an “owner-only” business, you may think your retirement planning options are rather limited. On the contrary, you can enjoy some of the same retirement plans available to larger businesses. To qualify for “owner-only” status, your business must fall into one of the following categories:

  1. Sole proprietor: no additional employees other than the spouse of the proprietor.
  2. Partnership: employees are self-employed partners and their spouses.
  3. Corporation: only one shareholder and no employees other than the shareholder and the shareholder’s spouse.

Thanks to special exemptions granted by the Internal Revenue Service (IRS), an “owner-only” business can enjoy all the tax advantages of a pension or profit-sharing plan without being required to complete many of the administratively tedious tax forms and paperwork. In fact, these plans are often as simple to install as an Individual Retirement Account (IRA), and they can be a lot more rewarding.

Some of the best tax planning and wealth accumulation tools available are pension and profit-sharing plans. These plans can help you meet the challenge of income taxes through their tax benefits, while giving you the opportunity to save for retirement just like the owner of a larger company. Consider the following benefits you may enjoy from implementing the right plan:

  1. Contributions are tax deductible to your business.
  2. Your contributions, within limits, are made on a pre-tax basis.
  3. Earnings on assets accumulate tax deferred.

Regardless of the size of your business, a qualified financial professional has the tools and the know-how to assist you in implementing a retirement plan that best suits your needs and goals.


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