January 27, 2015
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Frank W. Seneco & Timothy J. Desmond
The ability to deftly use qualified retirement plans is extremely valuable for business owners. Retirement solutions can be considered a wealth enhancement service and, as such, it falls under the umbrella of advanced planning.
In a survey of 513 business owners, 37.2% had a qualified retirement plan (either a defined contribution or defined benefit plan) and 62.8% did not.
Among the companies with retirement plans, the monies tend not to be meaningful for the business owners. Only 16.2% said these funds are “important” and 55.5% described the plans as “somewhat important.” The remaining 28.3% said the funds in the retirement plans are “not important.” This is usually a function of the business owners not having significant sums in their qualified retirement plans for any number of reasons, such as the plan being “top heavy.”
Among the 322 business owners who did not have company retirement plans, the reason cited by three-fifths of them was cost (see chart). More than 40% of the business owners said such plans do not give them any direct benefits. About 35% said that difficult business conditions made offering qualified retirement plans unfeasible. And almost 30% were concerned about liability.
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