The Retirement Plan For Retirement Plans

766 Words Apr 13th, 2016 4 Pages
IV. DISCUSSION AND ANALYSIS
a. Retirements Benefits
Another of the concerns that Louis, Joyce, and Bryan have is they would like a retirement program that will shelter a substantial portion of their income from taxes. Of the myriad of choices, a company has for retirement plans, the best tax shelter for the owners is the qualified retirement plan. With the qualified retirement plan Louis, Joyce, and Bryan would be able to eliminate any current tax hit on a substantial portion of their income and be able to grow tax-free in a trust that they manage.
Through this plan the owners would be able to make tax-deductible contributions that would be based on actuarial calculations that will fund up to 100 percent of his or her highest three years of compensation or $205,000, whichever is lower. I.R.C. §415(b)(1). The contributions that will be made into the fund will depend on the age of the owner, which in the case of Louis, Joyce, and Bryan would be extremely beneficial since they are getting older and hope to retire soon.
The downside to this plan is that it will only work if everyone participates in it. Meaning that all of the employees have to participate, which can sometimes feel like a burden on the owners. A lot of times when companies have a lot of non-owner employees, the cost of funding the plans can be prohibitive and often times make it harder on the owners to actually have the tax shelters that they are looking for. Because Web-Master Inc., has 10 other employees…
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