Question

Your client is the owner of a business with six employees, and is thinking about setting up a qualified retirement plan. What questions would you ask the client, and why, to determine what kind of plan would be best for her? What questions would you ask the client, and why, to determine whether there might be some retirement-planning alternative better than a qualified plan?

Answer 1

While choosing a retirment plan for small business we should ask following question to the client.

1) How many employees will be participating in Retirment plan.

2) What are the minimum and maximum contribution limits for the employee and/or the employer?

3)Who can contribute – the employee, the employer, or both?

4)Is the plan easy to set up and maintain? What are the costs? What are the administrative steps involved, such as adopting a written plan, arranging a fund for the plan’s assets, notifying eligible employees about the terms of the plan, and developing a recordkeeping system?

5)How will you operate the plan so assets grow and tax benefits are preserved? How will you make contributions, manage assets, provide information to participating employees, distribute benefits, and ensure that the plan complies with current laws? What tax filings are required?

Yes there are some other retirment planning plans other the qualified plan like life insurance plan, medical plan, Group life insurance , Deferred compensation plan.

In selecting Qulaified vs Non qualified, the client will have take in to consideration tax benefit, maintenance cost of plan, employee needs etc and then select the best plan according to that.