SAN FRANCISCO, Dec. 5, 2012 /PRNewswire/ -- With the election over and the end of 2012 in sight, many high income professionals, self employed and small business owners are thinking about their 2012 income and taxes. Many would like know if there is anything they can do now to reduce their current year tax liability. Creating the right retirement plan can make a big impact on taxes. Take a look at this chart.
"On July 6, 2012, President Obama signed The Moving Ahead for Progress in the 21st Century Act ("MAP-21"), P.L. 112-141, into law. One of the most significant aspects of the act involves changes to the funding requirements for single employer defined benefit plans. These changes are expected to reduce minimum funding obligations for employers," said Karen Shapiro, CEO, DDB. "This was one of the 'risks' with DB plans that caused many large employers to freeze or terminate their plan and consequently generated negative perceptions in the marketplace. However, the dynamics are much different for self employed or small business owners with fewer than 5 employees and warrant an analysis of suitability for specific situations."
Self employed or small business owners are looking for better tax and retirement solutions
Numerous studies have shown that self employed or small business owners with fewer than ten employees who earn over $150,000 annually say they would save more if they had more tax deductions. Yet for a variety of reasons, many do not own the optimal retirement product. According to the 2009 Macromonitor Study by Strategic Business Insights (an economic study of Households in America)
53% own a traditional/ROTH IRA with a deduction limit of $5,000 + $1,000 if over age 50 for 2012
21% own a SEP with a maximum deduction of the lesser of $50,000 or 25% of income for 2012
29% own a 401(k) plan with a maximum salary deferral of $17,000 (+ $5,500 if over age 50). With Profit Sharing, an additional 25% of compensation can be contributed but combined total cannot exceed $50,000 (+ $5,500 if over age 50) for 2012
7% own a SIMPLE with a limit of $11,500 (+ $2,500 if over age 50) for 2012
The implication is that many business owners are not funding their retirement savings in the most tax efficient way.
Self employed and small business owners represent over 25 million firms in the US according to the US Census Bureau. Their retirement planning needs are unique. Dedicated Defined Benefit Services has focused on these special needs and created a packaged, simplified DB plan. This Defined Benefit plan design can allow qualified individuals to contribute and deduct up to $160,000-$200,000 annually, depending on their situation.
Small business owners can estimate their own potential tax savings and contribution limits using this online calculator.
For more information, download this whitepaper: " A powerful Tax Strategy for High Income Individuals with Self Employment Income and Small Business Owners". Plans must be opened by the end of the business' fiscal year, generally December 31st.
About Dedicated Defined Benefit Services/OnePersonPlus
Dedicated DB is the only national company focused exclusively on helping high income, self-employed individuals and small business owners minimize current taxes and maximize retirement savings by opening and utilizing the advantages of Defined Benefit Plans — the highest allowable IRS deduction on earned income and retirement contributions. For more information go to:
CONTACT: Karen Shapiro
CEO, Dedicated Defined Benefit Services
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SOURCE Dedicated Defined Benefit Services