Tag: Small Business

Understanding Minimum And Maximum Funding Levels For Defined Benefit Plans

Defined Benefit (DB) plans are a cornerstone of retirement planning for many employers and employees. These plans promise a specific benefit amount to participants upon retirement, making them a reliable source of income. However, maintaining a DB plan requires careful attention to funding levels, as both minimum and maximum funding requirements are heavily regulated to ensure solvency and compliance with federal laws. In this article, we’ll explore the concepts of minimum and maximum funding levels, why they matter, and how they impact plan sponsors.

The Evolution of Defined Benefit Plans: Traditional to Cash Balance

The landscape of defined benefit plans has undergone significant transformation since American Express established the first private pension plan in 1875. Traditional defined benefit plans dominated the retirement landscape through the 1960s and 1970s, but their popularity began declining in the 1980s due to increasing administrative complexity and cost concerns.

Do You Need a Formal Valuation for Your BORSA/ROBS Plan? Here’s What Business Owners Should Know

If you’re using a Business Owners Retirement Savings Account (BORSA) or Rollover as Business Startup (ROBS) to fund your business dreams, you’ve probably wondered about valuation requirements. As a business owner, understanding when and how to value your BORSA/ROBS plan assets isn’t just about checking a box—it’s about protecting your investment and staying compliant with IRS regulations. Let’s break down everything you need to know about BORSA/ROBS plan valuations in plain English.

SOLO 401(k) PLANS

With the growing gig economy and more individuals choosing self-employment, solo 401(k) plans are gaining significant interest. Understanding these retirement plans and their unique benefits can help eligible small business owners maximize their retirement savings.

Harnessing the Advantages of the ROBS / BORSA Structure.

ROBS (Rollover as Business Start-up) or BORSA™ (Business Owners Retirement Savings Account) structures are exclusively compatible with C-Corps. This is because only C-Corps permit a 401(k) profit-sharing plan to serve as a shareholder. Upon discovering this exception, some prospective clients may feel disappointed, as the C-Corp often carries a stigma of “double taxation”. Historically viewed as “the entity choice of last resort” due to potential for double taxation resulting from corporate-level taxes and subsequent taxation upon distribution or liquidation.  The good news is that C corporations present unique tax advantages that S corporations and partnerships cannot replicate.