Is this you?

I have a small business with just a few employees, but pay a lot of taxes. I am behind on my retirement savings and my current retirement plan won’t allow me to put enough back to catch up. One of my biggest fears is my family will suffer financially if I die before I retire. I want my spouse to be comfortable for the remainder of her life and to be able to do the things that are most important to her.

Idea:  Qualified Combo Plan

Huh?

In a nutshell, a combo retirement plan potentially allows a business access to large income tax deductions. The first component is a plan for your employees. A defined contribution plan such as a 401(k) profit sharing plan is used to meet the non-discrimination requirements under qualified plans.  The second component is a plan for (you) the business owner. A Split-Funded Benefit Plan, which in many cases is available solely for the business owner, will allow you to shelter up to a whopping $195,000 per participant for the year 2010. It also allows its participants to gain additional life insurance protection that could cost less than the full premium.

How does it work?

After the business establishes the plans, tax-deductible contributions will be made to both plans to fund the retirement benefits calculated by the qualified plan administrator. A portion of the business’ contribution will be used to pay premiums on a life insurance policy insuring the participant’s life (you). Should you die prior to retirement, the life insurance death benefit will be paid to the plan; hence, providing the benefit to your heirs. If, however, you retire prior to death, you have the option to keep the life insurance in place or utilize the cash value to supplement your retirement income.

OR, is this you?

My whole life has been my business. I have not saved for retirement. My business is my retirement. My biggest fear is being sued and losing the assets I plan to fund my retirement.

Idea: Asset Leverage Financed Retirement

Huh?

Put the value of your business to work for you. This arrangement allows you to acquire a loan from a third-party lender using your assets (usually accounts receivable) as collateral for the loan. P.S.: This step usually requires the lender to file a UCC-1 statement, which protects your assets in most cases form unwanted creditors. The loan you acquire is used to purchase a life insurance policy. Once you retire the loan is repaid with your business assets (usually accounts receivable). The cash value in the life insurance policy accumulates tax deferred and can be withdrawn tax-free to supplement retirement income. You can also surrender the policy for the amount of the accumulated cash value. There is just one catch. This is not a simple strategy to set up in order to take advantage of tax situations. Always consult with your Life Planner before doing anything.

Here are just two of many planning strategies utilized to help business owners protect assets, plan for their futures and take care of their families. What is your Life Plan missing? Not all strategies may be suitable for all investors.