Who is your Qualified Retirement plan really for?
If you answer this question based on who benefits the most proportionally or who has the fewest restrictions the answer is your employees…not the business owner. As they should have retirement benefits that are designed to benefit them…but what about you the business owner? Shouldn’t you have a plan for you?
Of course you should because all people deserve the right to pursue their retirement without restrictions, right?
In my live webinar I will reveal the difference between qualified retirement plans and non-qualified retirement plans and why as a business owner you want to know the difference. To register for free follow the link below:
You might be wondering, what are Qualified and Non-Qualified plans though, right?
Well, I go into this in my webinar, however, the short definition is as follows.
A Qualified Retirement plan is any Government sponsored retirement plan that meets the requirements set out by the government and therefore, “qualifies” for special tax incentives. Here are some examples of qualified retirement plans:
- SEP IRA
- Simple IRA
- Roth 401(k)
All of the above types of retirement plans have to meet Government guidelines all designed to make sure that highly compensated employees including the business owner do not proportionally benefit more than the non-highly compensated employees and why? Because Qualified Retirement plans are designed to benefit your employees first and foremost. If you as a business owner benefit too then so be it, but not more than the everyday worker.
Which is fine because your employees deserve a good retirement and so do you!
Then what is a Non-Qualified Plan? EVERYTHING ELSE that is not a Qualified Plan.
So let’s take a quick look at the Pros and Cons of both Qualified and Non-Qualified Retirement plans from the business owner’s perspective…
Pros of Qualified Retirement Plans:
Qualified Retirement Plan Pro #1: Tax incentives for all!
All qualified retirement plans offer some form of a tax incentive. Typically either a tax deduction OR tax free distribution (but never both) and usually tax differed growth. Essentially you have to choose whether you want a tax break now or when you take the money out.
Whether taking a tax break now or when you take the money out as a distribution is better is discussed in my live webinar so if you haven’t already register for my upcoming webinar to see a realistic scenario on the impact of saving taxes today vs. tomorrow.
Qualified Retirement Plan Con #1: Higher Administrative Cost
When you have a qualified retirement plan there are typically higher administrative costs because…you have to make sure that you are meeting the government guidelines to qualify every year AND if you don’t there are considerable more costs like paying taxes and penalties.
It is not uncommon to pay a third party administrator also known as a TPA upwards of $20,000 to administer your retirement or even more.
So what are these TPA’s doing to justify this fee? Well, that is Con #2…
Qualified Retirement Plan Con #2: Testing
Every year they have to run various tests to make sure that what occurred within the retirement plan meet those Government guidelines to qualify for the tax incentives.
But what happens IF the testing shows that the plan is not meeting the Government guidelines? You run into Con #3…
Qualified Retirement Plan Con #3: Contribution Limits
When you fail the testing the result is the highly compensated individuals like the business owner or anyone who is considered a key employee are limited on how much they can invest in their qualified retirement plan.
This is why any 401(k), 403(b), SEP IRA, Keogh, or Simple IRA is really best suited to help your employees first and foremost.
So what about Non-Qualified retirement plans?
Well, it’s basically the exact opposite of Qualified Retirement plans. Let’s look at the specific pros and cons.
Non-Qualified Retirement Plan Pro #1: Lower Administrative Costs
Typically, Non-Qualified plans have lower administrative costs because…of Pro #2:
Non-Qualified Retirement Plan Pro #2: No Testing
Since a Non-Qualified plan doesn’t qualify for Government sponsored tax incentives it doesn’t have to be tested…therefore lower administrative costs AND because there is no testing there is also…
Non-Qualified Retirement Plan Pro #3: No Contribution Limits
No contribution limits by the Government! That’s right, there are no Government rules on how much you can invest in a non-qualified plan as well as no other restrictions like when you can access the money and what to use it for.
It’s your money with no strings attached by the Government.
Can you see how this could be beneficial to the business owner? Unlike in Qualified Retirement plans you can do what you want with your money regardless of whether or not it gives you a larger benefit than your other employees.
So what are the cons then? Well there is only one con and that is…
Non-Qualified Retirement Plan Con #1: No Government Sponsored Tax Incentives
Now notice that I said “Government Sponsored Tax Incentives” because that doesn’t mean there can’t be tax incentives built into the vehicles you use to save for retirement. Which means that you if you structure your Non-Qualified plan properly you can still have 2 out of 3 tax incentives OR if you register for an upcoming Live Webinar you find out about a proprietary retirement solution that for the first time can give you the following:
- Tax deduction today as the business owner
- Tax deferred growth
- Tax free distribution
AND with all the Pros of a Non-Qualified retirement plan…just register below if you haven’t already where this proprietary solution will be revealed:
In addition to this unique tax efficient strategy I will also reveal the 3 Tiers of Distinction in our proprietary retirement plan including:
- Front Loading
- Power of Indexing
- Tax Free Distributions
Here’s a taste of what we will talk about in the live webinar about each tier of distinction.
Tier #1: Front Loading
Let me start out by asking you a simple question, “Would you rather invest $100,000 every year for 10 years OR invest a $1,000,000 in year 1?”
The answer mathematically speaking is $1,000,000 in year one because you will have more money after 10 years assuming the same rate of return…that’s the power of front loading and if you are wondering, “How” then register for the webinar and all will be revealed.
Tier #2: Power of Indexing
Do you know what a recent 20 year study revealed was the average Mutual Fund return over that same time period? It will surprise you and not because of how high it was. In fact it was nearly HALF of what the return was on Indexes.
Do you know as a percentage how many Mutual Funds failed to beat their unmanaged index benchmarks? Well, let’s just say there were a lot more that didn’t perform better than did…every year for 20 years!
All of these numbers of course I touch on in my Live Webinar, but even more concerning is the impact of losses in your portfolio which is why it is more important to minimize your losses than maximize your returns!
How would you like a portfolio that no matter how much the stock market drops you never lose a single penny to market risk? What if when all your friend’s are talking about the beating they are taking in the stock market you can say, “Eh, didn’t lose any money today.”
What if back in 2008 when many people lost 40-50% of their retirement assets you didn’t lose a single dime?
If you want to see (based on the numbers) the power of indexing and how you could never lose another penny because the stock market dropped then register below:
Now Tier #1 and Tier #2 are very distinctive and provide incredible value, however, it is Tier #3 that is arguably the most important…because it will put more money in your pocket than any other distinction.
Tier #3: Tax Free Distribution
It’s not about how much money you make…it’s about how much money you keep!
AND if you are not paying attention to taxes on your distribution then you might be losing more money than you keep!
This is often hotly debated, but in our Live Webinar I will walk through an example where the numbers speak for themselves so if you are interested in ending the debate of whether to take the tax break now or tomorrow register for the webinar and never question when to pay taxes again:
[Register Here: Qualified Vs. Non-Qualified Retirement Plans]
Then again…if you would prefer to make this decision even easier and avoid paying taxes today AND avoid paying taxes tomorrow then our proprietary solution has a unique wrinkle that lets you save on taxes at all stages of the game!
In addition to establishing a Non-Qualified retirement plan that…
- Harnesses the ability to front load you retirement
- Uses the Power of Indexing to grow your money
- Maximizes how much money you keep with Tax Free distributions
We also work with business owners to really partner with you and help you grow your business through additional financial services like (but not limited to):
- Business Brokerage Services
- Franchise Development
- Corporate Loans
As a trusted business partner we also find it important to help you minimize your bottom line through services that include:
- Tax Incentives that go beyond your typical CPA
- Lowering Your Property Taxes
- Expense Reduction without changing your vendors
If you would like to learn more about these services follow the link to my other blog where I go into more detail and you’ll have an opportunity register for another Live Webinar where I dive into these topics in greater detail:
Now you might be wondering how we do all this? Well after over 12 years in the financial services industry I was left thinking that the only place to necessary expertise was with a large CPA firm like Deloitte or Ernst and Young and most small and medium sized businesses can’t afford the bill of a Deloitte or Ernst and Young so most business owners have missed out on the types of services that Fortune 500 companies have enjoyed for decades.
Until now because I was fortunate to find an agency that for the last 18 years has quietly been filling the need for bringing Fortune 500 level consulting to small and medium sized businesses without the massive price tag!
In fact, you’ll be happy to know that we don’t charge large consulting fees up front…in fact for some of our services we don’t charge you a single dime! So if you would like to know more about the agency I represent and how we are compensated for the incredible work we provide then follow the link below and register for our next upcoming Live Webinar where all will be revealed:
Until next time, make a great day by taking massive action so you can make it a great day for someone else who might need your help!
Stryde Senior Agent