Which retirement plan should you fund this year?
This is another important pre-year-end question for your tax pro because some plans must be set up or funded before the end of the calendar year.
There are various ways you can make contributions to your retirement. Some are deductible now, but will be taxed when you withdraw funds later; others are the reverse. Some are considered personal retirement plans, others are business plans. Although you are a business owner, ironically in some years your best strategy will be to fund a personal plan.
Don't fall for the marketing spin
It’s easy to get swayed by the compelling marketing messages that abound on retirement plans. But don’t get sucked in to what sounds like the perfect solution until you’ve reviewed the options with your accountant. Reality and marketing are probably at odds.
You’ve heard the acronyms -- IRA, SEP, SARSEP, SIMPLE and many more. Only one or two of these will turn out to be candidates that fit your particular situation. So ask your tax pro what type(s) you could use and what their contribution limits and deadlines are.
The IRS describes retirement plan options in Publication 535 Business Expenses and from there directs to additional resources. Even more information on SEP, Keough and SIMPLE plans can be found in IRS Publication 560 Retirement Plans for Small Business. It would be a good idea to read up on the different plan options before seeing your accountant so you are familiar with the options she may suggest to you.
Read up at IRS.gov
(do a search for the above publications within their "Forms & Publications")
|