Tip of the Week

The Tax and Ancillary Benefits of Retirement Plans

Planners need to advise small businesses about how they can capitalize on a tax shelter that costs the federal government billions of dollars in revenue each year—the retirement plan. They need to describe the efficiencies of making before-tax contributions and allowing earnings to grow tax deferred and/or making after-tax contributions and having tax-free withdrawals. Financial planners must also instruct plan sponsors on how a retirement plan strengthens business operations and the financial success of business owners. In other words, the retirement plan provides numerous benefits and a business that does not take advantage of these will lose out on a valuable opportunity.