Designing The Right Business Retirement Plan
The process of designing the “right” retirement plan for a business can be divided into three broad steps:
1. Gather the relevant information
2. Identify employer goals and objectives
3. Choose plan features that promote the employer
Employers have various reasons for wanting a retirement plan as well as many concerns about sponsoring one. Most of the objections, while valid on the surface, can be mitigated and reduced if not eliminated by a skillfully trained benefit specialist. I am again making a distinction between a salesperson and a trained specialist. Most smaller plans (fewer than 500 participants) never have a chance to meet with these type of specialists. I’m hoping my article will give you incentive enough to start seeking out this type of advice and adviser.
Pension plans can not meet everyone’s objective but here’s a list of some common things a pension plan can and should do:
1. Help employees with retirement savings
2. Tax deferral for owners and other highly compensated employees
3. Help recruit, reward, retain and retire employees
4. Encourage productivity
5. Discourage collective bargaining
6. Maximize employer contribution flexibility