Thumb of Michigan | Boone & Crockett - 5/29/2024 18:14
Nothing more to say on this subject,But I would like to expand upon Pat Michigan’s synopsis of the defined benefit plan. Always said, if you need to move a mountain, use a steam shovel and not a teaspoon. A defined benefit plan properly implemented for an individual facing/needing a large tax break, the defined benefit plan can accomplish it better than any other qualified plan available today. That will have to be another session sometime….
In the circumstances you describe- someone approaching the end of a career for example- a DB plan is a phenomenal tool.
In our case, we used the DB plan as a 1 time fully funded deal. We also understood that, at least in our case, we were trading a large one time tax bill for a tax bill that was going to be potentially smaller on the other end. You know- the famous "How do you eat an elephant" question. One bite at a time is the correct answer.
Our DB plan was easy and simple to set up really. The only 2 employees of a C corp was myself and my Dad. I was able to manage it. The only annual expense was for the actuary. Our target rate of return was low enough that the odds of being underfunded and having to make more contributions was pretty low.
My comments before were aimed more at a younger person with a full career ahead of him. You have a lot of time to bank a nest egg. There are a few ways to do that, and not necessarily one better than the other. Conversely, if you can see the end of your career and your nest egg is lacking, there are less options. Still good ones, but not as many. |
Roth 401k or traditional?
