Running a successful business is fantastic. However, with success come other issues like how to manage taxes, one’s income, etc. Many are aware of “qualified plans” or programs like 401(k) and defined benefit plans. But there are, I’ve found, many misconceptions about qualified plans.
Certainly an employee can make the most basic mistake of not participating in the company 401(k) plan. Everyone sees that. Let’s look at some other issues that can create underperformance.
Your business is successful and the days of plowing back profits for growth are in the past. The building and equipment is either paid for or being amortized. The biggest concern now is taxes. What solution is there and how can the tax bite be minimized?
Your business is established. You have a good reputation in your industry and a good management team in place. Gone are the days of building the business and putting everything back into the company to grow. That’s the good part! But with success come other questions and concerns.
One of the biggest misconceptions in the 401(k) world is all plans are created equal. Nothing could be further from the truth. It is this misconception that is hurting plan sponsors and plan participants alike.