Times have changed through the years and so have retirement plans. The defined benefit plan also known as a traditional “pension” plan, was very popular in the 20th century. In recent years, it has fallen out of favor, and is now mainly seen as a retirement vehicle for the public sector.
Corporate pensions, for their part, are fast becoming obsolete as well. Most companies stopped offering them to new salaried workers long ago. In an effort to shed fixed costs and stay competitive in still uneasy economic times, private sector firms are unlikely to start offering defined benefit plans again anytime soon, even if the economy begins to accelerate.
However, defined benefit plans continue to make sense for at least one important demographic: successful small business owners and entrepreneurs. For such individuals, pension plans are an ideal retirement vehicle, offering a wide range of benefits that could help them keep a larger share of their wealth and run better businesses.
For small business owners generating more than $200,000 a year in income, it is worth thinking about setting up a pension plan – even if they already have existing retirement vehicles in place, including a 401(k), an IRA, or both.
For successful entrepreneurs looking to take additional steps to plan for their future and that of their businesses -- and provide a vehicle for tax-advantaged retirement savings -- a defined benefit plan can address these objectives. So it’s worth a second look.
Please view the video accompanying this article – or give me a call – to learn more about the defined benefit plans for entrepreneurs.
Winnie Sun is a Registered Representative with and Securities offered through LPL Financial, Member FINRA/SIPC. Investment advice offered through Sun Group Wealth Partners, a registered investment advisor and separate entity from LPL Financial
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing.
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