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Retirement and Benefit Plans

Common Issues

Americans today face a greater responsibility to manage our own retirement future. We see decreasing number of pensions and an increasing retirement age for many. With longer life spans and new uncertainties, everyone has to accumulate more and make his or her retirement fund last longer.

Yet retirement/benefit plans are multi-faced and complex. Businesses generally face burdensome compliance issues. Even the innocent ones, such as the SEP, get tricky when the business owner wants the most tax savings (and who doesn’t?). Individuals can easily get confused even with the seemingly straightforward IRAs when the powerful tax-free Roth came into play by 1998.

Like many other parts of our tax law, rules governing retirement plans change often and fast. For example, the “extra catch-up contribution” for taxpayers age 50 or older was just made available in 2002. But that “little change” has a big benefit for those individuals (in 2003, the extra contribution allowed could be as high as $2000 each). Another example: the once attractive Keogh suddenly lost its charm when the new tax law gave the hassle-free SEP the same tax saving power.

Solutions for You

While it’s true that tax laws concerning retirement/benefit plans varies greatly, they have one great thing in common: offering legitimate and attractive “tax shelter” for your money.

Assume one is at age 35 and put $10,000 per year into a retirement plan with an annual growth rate of 8%. She would have $1,223,458 by age 65. Now assume everything is the same except her saving is not tax sheltered and her combined federal and state income tax rate is 30%, by age 65 she would only have $544,848. Even if the same tax rate would apply when she turns 65 (which is unlikely after retirement), the taxpayer would still have much more than that without using retirement plan.

With specialty training in this area, we can also assist you to catch “windfalls” and avoid “traps”. For example, if you run a business with fewer than 100 employees, do you know that the SIMPLE beats 401(k) hands-down in terms of management cost and compliance burden? Also, are you aware of the different impacts inside different plans with regard to the FICA tax, the only “no-escaping” tax levied on every employer and employee in the entire US tax code? Or, when all available pre-tax plans have been utilized, what should be the next most efficient tax-saving vehicle for your particular circumstance?

We help both enterprises and individuals engage in the powerful tax saving plans effectively. We provide "turn-key" packages as well as case by case consulting for your unique circumstance.