2.
Re: Small Biz Yr End Cash Carryover and Defined Benefit Pension Sep 15, 2008 1:18 PM
Depending on your organizational structure, you can defer up to $185K a year for your retirement (and partially fund it with company tax savings) in a defined benefit plan; however, there is a caveat; the deferrals in a Defined Benefit plan are
mandatory, so you have to know going in that you'll have to make those contributions year after year (whether the money is there or not). Otherwise, the plan unwinds, and you are looking at taxes on all those past deferrals...yikes.
The big question is the number of employees and whether you have stable, dependable cash flow year over year. In a defined benefit, you are also making contributions for your employees, as opposed to the standard 401k, where your employees bear the responsibility of saving for their own retirement. If you don't have predictable/stable cash flow, a defined benefit plan is not for you. I'd be happy to help.
As an S-Corp, you are a flow through entity, and as such, whatever revenue is not paid out flows through personally, regardless of where you park it. There are other entities that would definitely provide a sheild between personal and business; it's a matter of weighing the pros and cons of each entity against your unique requirements/situation.
