“Thumbnail” Estimate of Business Owner’s Retirement Need
1.Choose desired annual retirement income.
2.From that amount, deduct Social Security ($10,000 if single/$15,000 if married)
3.Next, deduct annual pension payment (ignore 401K and IRAs)
4.Multiply the net amount X 14 to find the total savings needed.
Source: Business Digest, January 29, 2004.
[Chart 3 and call-out]
To enjoy those tax deductions, federal law makes you follow certain rules about including employees, limiting contributions for higher paid owners and restricting
Factors affecting the selection of a Qualified Plan
?Number of years until retirement
?Age owner expects to retire
?Number of employees and expected cost
?Successor management identified
?Cash flow and administrative costs.