{"id":4327,"date":"2022-12-01T18:14:22","date_gmt":"2022-12-01T18:14:22","guid":{"rendered":"https:\/\/fusionwm.com\/?p=4327"},"modified":"2022-12-12T18:22:24","modified_gmt":"2022-12-12T18:22:24","slug":"stop-ignoring-this-powerful-type-of-retirement-plan","status":"publish","type":"post","link":"https:\/\/fusionwm.com\/stop-ignoring-this-powerful-type-of-retirement-plan\/","title":{"rendered":"Stop Ignoring This Powerful Type of Retirement Plan"},"content":{"rendered":"\n
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In a world where 401(k)s are immensely popular, many other retirement plans are ignored and overlooked. Some are even viewed as old-school dinosaurs that have become irrelevant.<\/p>\n\n\n\n

But the fact is, if you\u2019re doing what everyone else is doing in terms of your business\u2019s retirement plan solutions, you might not be nearly as effective and impactful as you could be. The \u201cstandard issue\u201d solutions that are so common may actually do very little to maximize personal wealth\u2014and as a result, you could be missing out on opportunities to grow your assets significantly.<\/p>\n\n\n\n

In contrast, a relatively select group of entrepreneurs are tapping into the power of other types of retirement plans that can benefit them greatly.<\/p>\n\n\n\n

It\u2019s time to ask yourself: Should I go my own way when it comes to my company\u2019s retirement plan?<\/p>\n\n\n\n

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The retirement plan landscape among businesses<\/h1>\n\n\n\n

The first step to answering that question is to consider the retirement plans most business owners are familiar with: qualified retirement plans.<\/p>\n\n\n\n

Qualified retirement plans are legal ways to shelter assets from taxes. You typically contribute pretax dollars and pay taxes only when you take funds out. The qualified plan provisions were put into the tax code to help motivate people to save for retirement.<\/p>\n\n\n\n

The majority of successful business owners we surveyed are taking advantage of qualified retirement plans\u2014although it is not an overwhelming majority (see Exhibit 2).<\/p>\n\n\n

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It may be that many of these owners have set up retirement plans mainly as a way to help attract and retain top-tier employees\u2014not for their own benefit. Among those companies with qualified retirement plans, the amount of money that successful business owners can save in these plans tends not to be all that meaningful. As seen in Exhibit 3, only about one in ten business owners says these funds are \u201cimportant\u201d to them. About one-third say the monies are \u201cnot important.\u201d<\/p>\n\n\n

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It\u2019s clear to us that many business owners are not taking advantage of these retirement planning tools\u2014and even among those who are, many aren\u2019t getting what they should be getting from them.<\/p>\n\n\n\n

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The power of defined benefit plans for owners<\/h1>\n\n\n\n

The good news: There is a certain type of comparatively sophisticated qualified retirement plan that can be extremely beneficial to entrepreneurs in their quest to become seriously wealthy.<\/p>\n\n\n\n

It\u2019s the defined benefit plan.<\/p>\n\n\n\n

Defined benefit plans promise a percentage of compensation to be received at retirement. That is, you (the business owner) will get a fixed percentage of your salary. As you become increasingly successful and generate larger amounts of discretionary (and taxable) cash flow, these plans can become quite attractive.<\/p>\n\n\n\n

When set up optimally, defined benefit plans offer some attractive advantages to successful business owners whose businesses are generating ample cash flow. Examples include:<\/p>\n\n\n\n