Retirement planning is never easy, especially if it's up to just you to work out all of the details for your employees. If you might be thinking that a 401(k) plan isn't the best fit for your business, take a look at this recent Tools & Tips column on NFIB.com, which discusses whether a 412(i), which combines pension payouts and life-insurance protection, could be a good choice instead.
Some of the plan's pros include:
- Funded exclusively by individual annuities or a combination of annuities and life-insurance contracts
- Can provide fixed, known monthly retirement benefits, life-insurance protection and, relative to other plans, large tax-deductible contributions (in excess of $300,000) that can build a substantial retirement fund in just a few years
- Any business, whether C Corporation, S Corporation, partnership or sole proprietorship, can establish a 412(i) plan
And some potential cons include:
- Because of the large contribution levels, 412(i) plans are not for struggling companies
- Unlike some other pension plans, loans against 412(i) funds are not allowed
- There is no investment flexibility. By law, a 412(i) must be funded entirely with insurance and annuity contracts
Posted by
Megan Goodchild on July 13, 2007 09:23 AM
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