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Retirement Plans

The Social Security benefits you may expect to receive will make up only a portion of your retirement income. And income from your business—through a sale, consulting agreement, or otherwise—may not be as much as you expected. In order to help you save for your own retirement and to encourage employers to provide retirement benefits to employees, the tax laws contain special incentives for retirement savings. Broadly speaking, if a retirement plan conforms to special requirements, then contributions are deductible while earnings are not currently taxable. What is more, employees covered by such plans are not immediately charged with income. If you have employees, setting up retirement plans to benefit them not only gives you a current deduction for contributions you make to the plan but also provides your staff with benefits. This helps to foster employee goodwill and may aid in recruiting new employees.

The type of plan you set up governs both the amount you can deduct and the time when you claim the deduction. Certain plans ...

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