Pension and Retirement Plans

Employers are increasingly realizing the importance of a solid benefit package to attracting and holding their best employees. An attractive benefit package may include one or more of several types of qualified retirement plans: pension, profit sharing, stock bonus, or 401(k). In addition to the employment incentives, a qualified retirement plan provides employers and employees with a number of significant tax benefits from establishing a qualified retirement plan. Some of the advantages include the following:

• Contributions to the plan are tax deductible by the employer.
• Contributions to the plan are not tax deductible as current income to employees participating in the plan.
• The investment earnings of the plan fund are tax exempt while in the plan.
• Employees may receive favorable income tax treatment of retirement funds upon distribution of retirement benefits.

McLane, Graf, Raulerson & Middleton can assist clients in establishing and maintaining qualified retirement plans. We provide a full range of employee benefit services to help you choose the right kind of plan and comply with the qualification requirements of the law. We can also help you maximize the tax benefits available under these plans.

Implementing a qualified retirement plan, whether it is a pension or profit sharing type of plan, requires an analysis of the employer's goals as well as business and financial considerations. Such an analysis should include a review of the employer's ability to make yearly or less regular contributions to avoid penalties or plan problems. A self-employed individual with few or no employees may seek to maximize his or her own retirement benefits and tax savings. This too can be accomplished by adopting the appropriate qualified plan. Often an employer may not be in a position to make regular contributions to a retirement plan but may still desire to provide its employees with a means to save through salary deferral. Here tax advantages can be obtained by establishing a 401(k) savings plan. Under such a plan an employer can make a matching or discretionary contribution to enhance participation and retain valuable employees.

We can assist employers who do not need or want an individually designed retirement plan by adapting existing qualified plans to meet their needs. These types of "form" plans are offered by many banks, insurance companies and investment firms. These form plans have been pre-approved by the Internal Revenue Service and are designed for mass use. Employers may choose among various standard options provided so that the plan fits their needs. These prewritten plan documents can be much less expensive than individually designed plans. However, because they are not designed for a specific employer they should be reviewed by a pension specialist to ensure that they fulfill the employer's needs. A review of these plans can also ensure satisfaction of federally imposed requirements under the Internal Revenue Code and the Employee Retirement Income Security Act of 1974 (ERISA). Whenever the ERISA regulations become too burdensome for the owners, or their retirement plan is no longer cost-justified, or it is necessary to terminate the business, we are likewise able to guide you through termination and liquidation of your plan.

While qualified plans provide employers and employees with substantial benefits, employers thinking of adopting a plan should be aware that there are extremely complex rules and regulations that must be complied with. Over the past ten years legislation has greatly increased this complexity from the standpoint of both compliance and operations.

For further information, contact one of our Pension, Profit Sharing, and Employee Benefits Attorneys at (603) 625-6464.