TAX-FREE RETIREMENT PLANNING SERVICES
TAX-FREE RETIREMENT PLANNING SERVICES 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.