If you participate in a qualified 401k plan, you’re among millions of Americans utilizing this option for retirement planning. These plans are a great way to sock away pre-tax dollars to fund your future lifestyle once you retire. A properly planned 401k can also represent an excellent benefit for a business owner as well. Here’s how.
We recently met with small business clients, along with their CPA. This particular client generates around two-and-a-half million dollars in gross revenue a year. The owners, a husband and wife team, each earn $75,000 a year in W-2 wages, and the business saw a profit of just over $297,000, which is split 50/50 between them. They’re frugal with their money, carrying no debt and spending roughly $6,000 a month on living expenses. This has been the key to their success.
“So for just $18,000 in costs to them, we essentially cut their tax bill by more than half. ” – Justin Goodbread CFP®Click to tweet
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As with anything, each situation is unique; however, with the current Department of Labor rules in flux, one of the actions we’re taking to help business owners is offering a COMPLIMENTARY 401(k) review. So if your company offers a 401(k), SEP, or SIMPLE plan, we would like to help you. If you’d like to see how comprehensive tax planning could benefit you and your business, give us a call. Now is the perfect time to review your future plans to see if you could qualify for extra tax savings. With proper planning, we may be able to create some added tax deductions. This is certainly one of those situations where working with your CFP® and your CPA could save you thousands of dollars.