DESIGNING WISELY
Retirement Plans Aren’t ‘One Size Fits All’
By Paul McEwan,
CPA, MTax, AIFA,
director of benefit
plan services (New
Philadelphia office)
D
o your employees dream of
spending their golden years on
a sun-drenched beach, sipping
tropical drinks from a coconut shell? Or
do you think they’re looking forward to
taking on a part-time job at age 70 to
pay medical bills and their mortgage?
Like you, they’re probably expecting an
R&R-fueled retirement – but they need
your help getting there.
An employer-sponsored retirement plan
is a great tool for business owners. Not
only do retirement plans provide businesses with leverage when it comes to
attracting and retaining a skilled workforce, employers that make contributions
to their employee’s accounts are entitled
to tax incentives – which gives you more
control over your company’s cash flow.
From Business Strategy
To Retirement Planning
Whether your company presently offers
a retirement plan or is planning to beef
up its benefits package, work with a retirement plan advisor who can review
your options and identify the plan that
best addresses your company’s unique
challenges. You’ll need to:
10
1. IDENTIFY THE PRIMARY PURPOSE
OF YOUR RETIREMENT PLAN
Will your retirement plan be used
as a recruitment tool or as a tax
shelter? While all plans accomplish a little of both, make sure
your plan design meets your needs.
For example, when a closely held
business offers a retirement plan, its
primary goal is to provide maximum
retirement benefits and income tax
deferral to the owners, while minimizing the cost of benefits to the employees. Incorporating a retirement plan
into your existing benefit package is
also an opportunity to diversify your
assets away from the reach of creditors – making you less dependent on
the value of your company to provide an income stream in retirement.
2. GET TO KNOW YOUR TEAM
Does your company hire younger
workers? Do you have an established workforce that will retire
from your company? Do you have
high turnover? What does your
projected workforce growth look
like? Your plan design should consider your demographic information – and promote the short- and
long-term financial wellness of
your employees and your business.
3. PUT YOUR OWN RETIREMENT
GOALS IN PERSPECTIVE
Your employees aren’t the only ones
looking at your employer-sponsored
retirement plan as a dependable
source of retirement income. You and
other key employees will likely use the
plan as well. That’s why, during the
design phase, your advisor will take a
look at the current and projected profitability of your company alongside the
ratio of key employees and the company’s other employees.
When all is said and done, your plan
design could be the thing that stands
between your employees and a comfortable retirement – or it could be what lets
them reap the benefits of all their years
of hard work.