The post retirement days can be troublesome with financial difficulties creeping in if adequate measures are not taken before hand. What exactly can be done in order to ensure that you can lead an easy and comfortable life even after your retirement? You need to arrange for something which would keep on supplying you with the required resources. And that is nothing other than a good pension plan. A pension plan is something which you would arrange beforehand, so that your financial requirements can be met even after you get retired.
How would you select a Pension Plan?

This can be a difficult and confusing task. There are so many issues which need to be taken into consideration before finalizing on a particular scheme. Different tax related aspects and other calculations are needed to be done in order to find out the scheme which would suit you the best. As an applicant, you can select your pension plan; however, before you do that, you need to find out the best plan for you. And here come the advisors into the picture:

What can be the role of a Pension Advisor?

When it comes to selecting the best pension scheme, a good and reliable advisor can be of great help. It could either be a company or an independent advisor. The advisor, after taking into consideration numerous factors like your age, current earnings, estimated earnings in the future and other issues like tax benefits and etc, would suggest you a plan which would suit you best. These are experts who have all the required skills to figure out what exactly would be the perfect option for you.

Though, there are many agencies that are ready to offer you some of the most attractive and lucrative pension plans, it is very important to make sure that you know about the best scheme.

How can the Review be Helpful?

Reviewing your pension plan has numerous benefits. What makes it so important is the fact that it tells you whether the existing one is meeting your requirements and what could be the situation in the days to come. Are you getting the tax benefits which you deserve? Are you getting less than what you have asked for? These are some of the aspects which are being looked at in the process of pension plan review. It is like auditing where the current position of the plan is being assessed. Reviewing of pension plan is a very important aspect. It is absolutely necessary in order to ensure whether the existing one is working properly and if any changes are required to be made in order to make it more effective.

There are numerous schemes you can choose from. For those who work in the government undertakings, for them, they are automatically eligible for pension post retirement. However, for those who work in the private sector, for them there are numerous external financial agencies who offer different types of pensions advice. As such seeking the help of an expert will help you to choose the best and the right plan for you.

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Extensive paperwork, high costs and complicated administration associated with certain qualified retirement plans may cause many small businesses to shy away from establishing any retirement plan at all. This may be true of your small business, even though you recognize the many tax and employee retention benefits of providing a plan. Whether you are a doctor, lawyer, free-lance writer, artist, manufacturer’s representative or another type of self-employed business owner, the Simplified Employee Pension Plan, or SEP-IRA plan, may be a good fit for your small business.

Although a SEP IRA account is technically an Individual Retirement Arrangement (IRA), the SEP plan functions more like a cross between an IRA and a profit sharing plan. As with a profit-sharing plan, your small business may make a tax-deductible contribution to each employee’s SEP-IRA account up to the lesser of 25 percent of compensation or $44,000 (2006). The business owner has the flexibility to choose any level of contribution (within the above limits). The business owner has the discretion to set the contribution amount as low as zero. This can come in handy in years when business cash flow is a little less than desirable. But, it is the difference from, not the similarity to, a profit sharing plan that makes the SEP too good to overlook: the SEP is simple.

The simplicity of the SEP significantly distinguishes it from the traditional profit sharing plan. A SEP is easy to establish and maintain, which makes it less expensive than a profit sharing plan. The SEP may be established by any corporation (“S” or “C”), partnership, non-profit organization or sole proprietor. There is no complicated adoption agreement to purchase, complete or file with the Internal Revenue Service (“IRS”). A simple one-page form is all that is required to establish a basic SEP, and this form may be obtained at no cost.

Other aspects of the SEP illustrate its simplicity as well, including vesting and the allocation of contributions. SEP contributions are always 100% vested in the employees, so there is no vesting schedule to keep track of. Additionally, each employee receives the same percentage of pay contribution. So the contributions are easy to calculate. Alternatively, you may choose to purchase a SEP document that “integrates” with Social Security to provide a larger contribution for the higher wage earner, which is usually the business owner.

The uniformity of the SEP eligibility rules also creates simplicity. Eligibility rules are applied in the same manner to the business owner and each employee. SEP eligibility rules provide that the plan must cover employees who have reached age 21 and who have earned at least $450 in any three out of the last five years. Of course, you do not have to use the maximum three years of service. You may want to use a shorter period if, for example, your business is a younger than three so that you are not eliminated from your SEP.

The simplicity of the in-expensive SEP makes it a powerful tool for many small business owners. The above article mentions just a few of the many tax and retirement planning benefits that may make the SEP a good fit as one component in your business plan. For assistance in evaluating the fit of the SEP with your small business and before implementing any significant retirement planning strategy, please consult with your Financial Advisor.

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