Are you Maximizing Your Annual Retirement Savings?

Many business owners think of their company retirement plan as an employee benefit.  It is that, with all of the perks of employee recruitment and retention. However, there are also many creative plan design opportunities business owners can utilize to meet their personal financial goals and maximize their own retirement savings.  

For 2012, the IRS maximum individual contribution limit to a defined contribution plan will increase to $50,000 (or $55,500 for an individual age 50 or older under a 401(k) plan).  This could amount to significant retirement savings for owners with the ability to annually fund an employer contribution to their plan which would support these maximum amounts.  

And with some additional creative design, the employer contribution could be allocated among employees within the plan in such a way to maximize the owner’s share of the contribution.  

A typical component of this plan design is a Safe Harbor 401(k) feature, which would allow the owners to maximize their individual 401(k) deferral contributions at the annual IRS limit ($17,000 for 2012 plus an additional $5,500 in catch-up deferrals if age 50 or older) without nondiscrimination testing limitations.  A benefit to this is that for years when the ability to fund the maximum contribution is not possible, the plan is still flexible enough to allow owners to maximize their individual 401(k) deferral contributions. 

At Markley Actuarial, helping employers realize their goals is at the heart of our mission.  We enjoy tailoring plan designs and running the numbers to help you find the right plan for your company.    Business owners take on the risk and the headaches of ownership and a well-designed retirement plan can help provide the reward.

Erik Mitchell
Markley Actuarial