Is an Owner Benefit Plan Suitable?

Posted on September 20, 2011 by Bill Faiferlick
At a 2003 Congressional hearing, Alan Greenspan, former Federal Reserve Board Chairman’s, thoughts on retiring planning benefits, stated: “The biggest challenge for Americans today is the challenge of planning for retirement. For most Americans, this will be the single biggest decision they will make in their life.”
If you answer affirmatively to the questions below, an owner benefit plan may provide the benefits you are looking for.
1.      Do you consistently have more taxable income than you need to maintain your lifestyle?
      Yes____No____
2.      If you had the option, would you take funds that you normally pay in taxes and place them in a tax deferral retirement plan, knowing the contribution is fully tax deductible?
      Yes____No____
If yes, how large of a tax deduction do you need?                                                              $________
3.      How many owners and/or key people need this type of deferral?                                       ________
4.      For how many years are you willing to make this annual deferral? (Normally not less than 5 years unless age of 58 or older)                                                                                                                            ________
5.      Does your business or practice have a qualified plan in place?
      Yes____No____
If yes, what % of salary does the company contribute to the employees?                         ________%
6.      Are you frustrated with contribution limits of your current plan?
      Yes____No____
7.      Do you need additional deductions ranging from $40,000 to $350,000 per year including what you may already be deferring?
      Yes____No____
8.      Is it important to you that the plan’s accumulated values be contractually guaranteed against loss?
      Yes____No____
9.      Is protecting plan values from the claims of creditors and judgments important to you?
      Yes____No____
10.      Are you concerned about efficiently transferring plan assets to your beneficiaries?
      Yes____No____
11.Are you interested in the plan offering disability benefits to you at no additional expense?
      Yes____No____
12.Understanding that your business must contribute a modest amount of the benefit to some employees, would you accept a plan that delivers 80% to 90% of the deferral to you as your benefit?
      Yes____No____