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Retirement , Succession Plans : " Must Haves " for Business
Tim Jones
Edward Jones Financial Advisor ( 678 ) 688-7536 1705 Williamson Rd Suite 103 Griffin , GA 30224
If you own a business , you may well follow a “ do it now ” philosophy — which is , of course , necessary to keep things running smoothly . Still , you also need to think about tomorrow — which means you ’ ll want to take action on your own retirement and business succession plans .
Fortunately , you ’ ve got some attractive options in these areas . For example , you could choose a retirement plan that offers at least two key advantages : potential tax-deferred earnings and a wide array of investment options . Plus , some retirement plans allow you to make tax-deductible contributions . including an outright sale to a third party , a sale to your employees or management ( at once or over time ), or the transfer of your business within your family through sales or gifts during your life , at your death or any combination thereof .
Many succession plans include a buy-sell agreement . Upon your death , such an agreement could allow a business partner or a key employee to buy the business from your surviving spouse or whoever inherits your business interests . To provide the funds needed for the partner or employee ( or even one of your children ) to purchase the business , an insurance policy could be purchased .
In selecting a retirement plan , you ’ ll need to consider several factors , including the size of your business and the number of employees . If your business has no full-time employees other than yourself and your spouse , you may consider a Simplified Employee Pension ( SEP ) plan or an owner-only 401 ( k ), sometimes known as an individual or solo 401 ( k ). Or , if your goal is to contribute as much as possible , you may want to consider an owner-only defined benefit plan .
If you have employees , you might want to investigate a SIMPLE IRA or even a 401 ( k ) plan . Your financial advisor , working with plan design professionals and your tax advisor , can help you analyze the options and choose the plan that fits with your combined personal and business goals .
Now , let ’ s turn to business succession plans . Ultimately , your choice of a succession plan strategy will depend on many factors , such as the value of your business , your need for the proceeds from the sale of the business for your retirement , your successor , and how well your business can continue without you . If your goal is to keep the business within the family , you ’ ll need to consider how much control you wish to retain ( and for how long ), whether you wish to gift or sell , how you balance your estate among your heirs , and who can reasonably succeed you in running the business .
Your estate plan — including your will and any living trust — should address what happens with the business , in case you still own part or all of it at your death . The best-laid succession plans may go awry if the unexpected occurs .
All these business succession options can be complex , so before choosing any of them , you will need to consult with your legal and financial advisors .
Whether it ’ s selecting a retirement plan or a succession strategy , you ’ ll want to take your time and make the choices that are appropriate for your individual situation .
You work extremely hard to run your business — so do whatever it takes to help maximize your benefits from it .
This article was written by Edward Jones for use by your local Edward Jones Financial Advisor .
Many succession planning techniques are available ,