AgTalk Home
AgTalk Home
Search Forums | Classifieds (162) | Skins | Language
You are logged in as a guest. ( logon | register )

Retiring ,looking for ways to Minimize Income Tax's
View previous thread :: View next thread
   Forums List -> Kitchen TableMessage format
 
pat-michigan
Posted 1/8/2023 04:33 (#10028185 - in reply to #10027935)
Subject: RE: Defined benefit pension plan.


Thumb of Michigan
Birddy - 1/7/2023 21:28

There is another thing you can do to defer income.  You can start the plan year in, for example, November and fund 2 years
of the pension, and expense it all in one tax year. 
This is really helpful if you have a machinery auction, or sell multiple years of grain in one year. 
You need an experienced retirement specialist to do this.  This is not your local bank or financial advisor. 
Fees vary, and your CPA should be able to advise you.  Some advisors in farm states work a lot with farms and small businesses.



You can pre fund an entire plan. Not limited to one year at a time. Depends largely on employees highest previous 3 years earnings. Those type of things alone make it hard to make a blanket statement.

You need an actuary. The actuary for starters will need to know how many $ are involved that are at question. Then needs to know your age. Lastly, you need to set a rate of return expectation. That needs to be fairly low.

Once the plan is funded, the actuary calculates the defined benefit after the fact. He/she calculates what the payment will be backwards- instead of using a future value.

If the annual returns are more than the target return , no money will ever need to be added. Hopefully anyway.

You need to file an annual report to the actuary. He/she will get paid annually. Ours was about $1500 a year. Seems like your accountant needs to file something with the IRS as well, but not sure now.

You can either manage the investments in the plan, or you can hire it done.

Taxes are treated as ordinary income and are due when distributed.

https://saberpension.com/2020/07/01/defined-benefit-plans-taxed/#:~:...

Edited by pat-michigan 1/8/2023 04:40
Top of the page Bottom of the page


Jump to forum :
Search this forum
Printer friendly version
E-mail a link to this thread

(Delete cookies)