What Are My Options for Managing My Retirement Now That I've Left Corporate America?

Transitioning from a corporate job to self-employment offers many benefits, including the ability to control your schedule and income. However, it also means that you must take full responsibility for your retirement planning. Here are some strategies and options to consider for managing your retirement now that you’ve left Corporate America:

Types of Retirement Plans

As a self-employed individual or small business owner, several retirement plans can help you save for the future:

• Solo 401(k): Ideal for self-employed individuals with no employees other than a spouse. You can contribute both as an employer and an employee, allowing for higher contribution limits.
• SEP IRA (Simplified Employee Pension): Allows you to contribute up to 25% of your net earnings from self-employment, up to a maximum amount. It’s easy to set up and has high contribution limits.
• Defined Benefit Plan (DB): Provides a fixed, pre-established benefit at retirement. These plans are more complex and costly but can allow for very high contributions, especially beneficial for high-income earners nearing retirement.
• Cash Balance Plan (CB): A type of defined benefit plan that acts like a defined contribution plan. It offers the high contribution limits of a DB plan but with the flexibility and portability of a 401(k).

Advantages of Retirement Plans for Small Business Owners

Retirement plans offer significant advantages for small business owners:

• Tax Benefits: Contributions to retirement plans are typically tax-deductible, reducing your taxable income.
• High Contribution Limits: Plans like Solo 401(k) and SEP IRAs allow for more[PC1]? substantial contributions than IRAs.? The ability to contribute as an employee and employer as well as adding a defined benefit plan or cash balance can help you save more aggressively for retirement.
• Flexibility: Plans like the Solo 401(k) and SEP IRA offer flexible contribution amounts, making it easier to adjust savings based on your income.

Downsides of Retirement Plans for Small Business Owners

Despite their benefits, there are some downsides to consider:

• Complexity: Plans like Defined Benefit and Cash Balance plans can be complex to set up and administer, often requiring professional assistance.
• Cost: Administrative costs and funding requirements can be high, especially for DB and CB plans.
• Contribution Requirements: For plans like SEP IRAs, you must contribute the same percentage of compensation for each eligible employee, which can be costly if you have multiple employees.
• Regulatory Burden: Ensuring compliance with IRS regulations can be challenging and may require ongoing oversight.
• Deferring Taxes?: For some deferring taxes can be a good thing, but entering retirement with a good balance of pre-tax and after-tax funds is a good idea.

Buying Life Insurance Inside of Qualified Plans

Using existing qualified dollars to purchase life insurance inside of the plan can add efficiency to your overall retirement strategy:

• Tax Advantages: Premiums for life insurance can be paid with pre-tax dollars if purchased within a qualified plan, offering tax savings.
• Financial Independence : Life insurance provides a death benefit that can offer financial protection for your beneficiaries.[PC2]?[1]
• Estate Planning: Using life insurance within a retirement plan can be an effective estate planning tool, helping to manage estate taxes and provide liquidity.

Using Non-Qualified Plans for Retirement Planning

A balanced tax allocation going into retirement is important, utilizing non-qualified plans is a good way to fix an unbalanced situation:

• Increased Liquidity: Funds contributed to after-tax sources give you more flexibility for threats and opportunities that may present themselves along the journey.
• No Contribution Restraints: Unlike qualified plans, after tax investment accounts have no limits to the amount that can be contributed.
• Basis: Non-qualified plans allow you to build a basis, according to the amount you contributed, this can be a helpful tool when it comes time to distribute money for cash flow in retirement.

Transitioning from a corporate job to self-employment means taking on the responsibility of managing your retirement planning. Ultimately the key to making these decisions is starting with the end in mind and understanding how different asset classes and types can work together to create cash flow for you in retirement.

For personalized advice and assistance in choosing the right retirement plan for your needs, take advantage of our complimentary scorecard process to see how you line up:? https://www.livingbalancesheet.com/lbsVision/lite/JoelGardner

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2024-177089 Exp 7/26

Guardian, its subsidiaries, agents and employees do not provide tax, legal, or accounting advice. Consult your tax, legal, or accounting professional regarding your individual situation. The information provided is based on our general understanding of the subject matter discussed and is for informational purposes only.???The Living Balance Sheet? (LBS) and the LBS Logo are service marks of Guardian. ? Copyright 2005-2024 Guardian

This material contains the current opinions of Joel Gardner and Consolidated Planning only. These are not the opinions of Park Avenue Securities, Guardian, or its subsidiaries. Registered Representative and Financial Advisor of Park Avenue Securities LLC (PAS). Securities products and advisory services offered through PAS, member FINRA, SIPC. Financial Representative of The Guardian Life Insurance Company of America? (Guardian), New York, NY. PAS is a wholly owned subsidiary of Guardian. Consolidated Planning, Inc. is not an affiliate or subsidiary of PAS or Guardian.CA Insurance License #- 4122962

[1] All whole life insurance policy guarantees are subject to the timely payment of all required premiums and the claims paying ability of the issuing insurance company. Policy loans and withdrawals affect the guarantees by reducing the policy’s death benefit and cash values.

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All whole life insurance policy guarantees are subject to the timely payment of all required premiums and the claims paying ability of the issuing insurance company. Policy loans and withdrawals affect the guarantees by reducing the policy’s death benefit and cash values.