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Our high contribution retirement plans
may allow your self-employed and
small business clients to take advantage
of the new pass-through deduction

SEE HOW MUCH YOU OR YOUR CLIENT COULD
CONTRIBUTE & SAVE ON TAXES

Using Retirement Plans to Qualify for Section 199A Pass-Through Deduction

Cash Balance and Defined Benefit plans can potentially bring your small business and self-employed clients below the taxable income thresholds ($315,000 married tax payer, $157,500 single tax payer) and save them tens of thousands of dollars in tax liability. These plans offer large “above the line” tax deductions. In many cases, these deductions lower taxable income sufficiently to qualify the tax payer for the additional 20% deduction and even lower their tax bracket. 

Their large annual contributions, generally, are new assets for you to manage. 

Sole Proprietor Opens Defined Benefit + 401(k) Plan to Build Retirement Wealth

PROFILE
James, age 52, is married. He owns a successful financial advisory with no employees. James nets $500,000 (after paying self-employment tax) as an independent financial advisor and would like to retain more of his earnings. 

NEW DEDUCTION
As an owner of a pass-through entity, the advisor could qualify for a new tax deduction (Section 199A) of up to 20% of his business income if his income is below the $315,000 threshold for married couples.

OBJECTIVE
Build retirement wealth while maximizing tax savings

SOLUTION
Defined Benefit Plan and 401(k) for 10 years

With a DB + 401(k) Plan
Net Profit: $500,000
DB + 401(k) Contribution: $238,100
QB Income: $261,900
Pass-Through Deduction: $52,380
Taxable Income: $209,520
$38,860 Tax bill
$87,520 Tax savings*

 * Compared to no DB/401(k) and 199A deduction

Do you have a high-income client like this?

Small Business Owner Opens Cash Balance + 401(k) Plan to Maximize Tax Savings

PROFILE
Dr. Smith is 62 years old and married. She has 4 employees. She generates income through her business and is paid W-2 income. With a healthy income of $620,000 a year, Dr. Smith would be a suitable candidate to use a Cash Balance and 401(k) Profit Sharing plan in order to lower her taxable income.

NEW DEDUCTION
As an owner of a pass-through entity, the doctor could qualify for a new tax deduction (Section 199A) of up to 20% of her Qualified Business Income if her taxable income is below the $315,000 threshold for married couples.

OBJECTIVE
Lower taxable income to maximize tax savings

SOLUTION
Cash Balance with 401(k) Profit Sharing Plan

With a CB + 401(k) Plan
Income: $620,000
CB + 401(k) Contribution: $308,920
QB Income: $311,080
Pass-Through Deduction: $62,210
Taxable Income: $248,870
$48,310 Tax bill
$120,470 Tax savings*

* Compared to no CB/401(k) and 199A deduction

For Dr. Smith, a Cash Balance and 401(k) Profit Sharing Plan offers a tremendous amount of value both in retirement savings ($298,136 for her, $10,784 for the employees) and tax savings 

Do you have a profitable business client like this?

Typical Client Profiles

If you have clients who are independent professionals, small business owners or individuals with side income, a high contribution retirement plan might help them save on taxes and build retirement wealth.

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Ready to talk?

Our Plan Consultants are ALWAYS AVAILABLE, even on weekends by appointment to help you help your clients.

CALL: 866-269-2706

or contact us at DBPlans@dedicated-db.com when you have small business retirement questions.

We are here for you.

SEE HOW MUCH YOU OR YOUR CLIENT COULD
CONTRIBUTE & SAVE ON TAXES

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