Tax-Free Retirement Planning Services by cmlang


									by: Ken Morris

For many self-employed individuals and small business owners, employer retirement plans are a
key part of retirement savings. Understanding how the employer retirement plan fits into an
overall retirement plan is important to being able to plan adequately for retirement.

Congress believes that employers should be encouraged to assist individuals in this retirement
planning stage. Congress recognizes that although many employees understand the importance of
setting money aside, few understand the link between their retirement savings and their overall
retirement planning. Therefore, Congress now permits employers who sponsor an employer
retirement plan to provide Qualified Retirement Planning Services to employees or their spouses
as a tax-free fringe benefit.

What makes this new development particularly interesting to self-employed individuals and
small business owners is that it permits them to spend pre-tax dollars on retirement planning
services. Additional benefits include increases in employee job satisfaction and retention, and
employee plan participation.

The retirement planning service is available on an employer-paid basis. The value of the
Qualified Retirement Planning Service itself is not charged to the employee or included in
taxable income. Thus, the value of the service is not subject to Social Security, Medicare, or
income tax withholding.

Highly compensated employees may only exclude the value of the service from income if the
service is available on a non-discriminatory basis to each member of the group of employees that
is normally provided education and information regarding the employer plan. This group of
individuals generally includes all participants in the employer retirement plan. However, the IRS
may permit employers to restrict retirement advice to individuals nearing retirement age under
the plan.

The Qualified Retirement Planning Services an employer provides may include advice and
information regarding retirement planning for an individual and/or his spouse about how the
employer retirement plan fits into their overall retirement plan. Employer retirement plans
includes SEPs, SIMPLEs, Profit Sharing Plans, Money Purchase Pension Plans, 401(k)s plans,
annuity plans, and 403(b) and 457 plans. As always, the value of any tax preparation, accounting,
legal or brokerage services provided by the employer must still be included in the taxable income
of the employee.

If the availability of using pre-tax dollars to get good professional retirement planning advice is
attractive to you, you will want to contact a qualified financial advisor. A qualified financial
advisor can provide more information on the Qualified Retirement Planning Services available to
you and your spouse.

This article was posted on March 06, 2006

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