Qualified Retirement Plan
TARGET MARKET
Though qualified plans can offer tremendous benefits to the business owners that implement them, it is important for you to understand the factors that make a business a solid candidate for a defined benefit or a defined contribution plan. You should be able to identify these factors during the fact-finding stage to make a proper recommendation about the solution that will best fit your client’s business goals.
There’s a variety of qualified retirement plans small businesses can implement. Finding the best fit depends on several factors specific to that company and specific to their goals. Watch the video below to understand what you need to know:
What Type of Qualified Plan Fits Your Business?Cat No 106403
Defined Benefit Target Market
Because they are structured to provide a specified benefit in the future, defined benefit plans often allow for much higher contributions than defined contribution plans, making them a very attractive option for business owners trying to maximize tax deductions. However, the annual contributions required in a defined benefit plan are not flexible and business owners must recognize the commitment that is required for funding such a plan. A business may be an appropriate candidate for a defined benefit plan if it
- has a small number of employees (less than 10)
- has a high and stable profit history
- has an older demographic amongst owners and executives with younger rank and file employees
- is committed to funding the plan for a minimum of five years
Defined Contribution Target Market
While defined contribution plans do not provide as high of a contribution ceiling as defined benefit plans, their flexibility makes them a more appropriate option in certain situations. A business may be more suited for a defined contribution plan if it
- is newly established
- has a larger employee base (10 or more)
- has a younger demographic
- has more variable income
- prefers more contribution flexibility
- wants to allow for salary deferrals
What questions do you ask a business owner to help determine if they may be a good candidate for a qualified plan?
Qualified Plans: What to AskScott Levin
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National Life Group® is a trade name of National Life Insurance Company, Montpelier, VT, Life Insurance Company of the Southwest, Addison, TX and their affiliates. Each company of National Life Group is solely responsible for its own financial condition and contractual obligations. Life Insurance Company of the Southwest is not an authorized insurer in New York and does not conduct insurance business in New York.
The companies of National Life Group® and their representatives do not offer tax or legal advice. Please encourage your clients to seek tax or legal advice from their appropriate professional advisor.
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TC127468(1223)3 | Cat 106313(1223)