Pension Plans –Do You Really Need One?
April 3rd, 2010 | by admin |As real estate investment advisors, our Financial Management Group consultants often run into clients whose professional corporations are struggling with the decision of whether or not to create a pension plan.
In most cases, the decision turns on whether or not there’s enough of a tax benefit to make it worth your while.
For example, we had one client that, while they did not have a pension plan, their professional corporation had built up around $1 million in retirement savings over two decades.
Sitting down with their tax consultants, we helped them create a pension plan that allowed them to place as much as $150,000 pre-tax annual into a retirement pension plan. Had they not created the pension plan, the after tax amount available for retirement savings would have come to just $90,000.
Even better, the IRS permits increased levels of savings for each pension plan participant as he or she ages, thereby increasing the benefits even more.
Bottom line: if you have a professional corporation and are even the least bit interested in building your retirement nest egg, a pension plan may well be the vehicle to do so. Every case varies, so we recommend you sit down with us to discuss your personal circumstances and all of your options.