Your Business

Company retirement planning

There are several reasons for a business owner to start a retirement plan for their company. On most people’s minds is the tax savings. Other good motivations are employee retention and tax leveraged compensation. Not every business can benefit from the implementation of a retirement plan so consultation with one of our CPAs is critical.

Below are a few basics:

Tax savings:

The company can take a deduction for the contribution to the plan and costs to setup and maintain the plan. The goal may be to maximize the owner’s portion of those funds but there are definite limits in every case.

Employee retention:

You might adopt a plan that has vesting requirements and payout schedules that reward employee loyalty. Even plans that don’t contain these requirements help retention and recruitment by being competitive with benefits.


Compensation should be looked at as a total package. The taxable wages plus benefits, whether taxable or not, make up the employee’s pay. By adding a nontaxable retirement plan you can pay more to the employee without the government taking a piece. We recommend you make it part of their next raise.

Potential downsides:

Some plans include mandatory contribution amounts with strict compliance rules. If you fail to comply with those, or other laws, you may find yourself with hefty taxes and penalties. Higher-end plans, like 401(k) and defined benefit plans, usually require a revision by an attorney every few years to stay current with changing benefit laws.

Give our professionals at JGC a call 503.390.7880 to find the best plan for you.

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