Keep best employees; save on taxes

Nov. 22, 2005
Trucking company owners have a tax-advantaged means of providing selective retirement benefits to employees, without the cost burden of maintaining employee plans

Trucking company owners have a tax-advantaged means of providing selective retirement benefits to employees, without the cost burden of maintaining employee plans. Such a qualified retirement plan offers many advantages over a 401(k), according to Jeffrey Sage, a financial advisor for Morgan Stanley and co-owner of a Wisconsin-based trucking company.

Qualified retirement plans allow business owners to offer employees retirement savings they manage themselves, said Sage. This saves the company tax dollars, while enabling it to negotiate retirement benefits and matches on a per-employee basis. It also absolves the company of the administrative and cost burdens of maintaining employee plans.

“The 401(k) is usually sponsored by the company,” Sage told FleetOwner. “It’s usually the company that funds part of that plan. The company has administration fees to manage that 401(k).”

A key advantage over a 401(k) is that a matching contribution does not have to be homogenous for all employees. This allows companies to offer more attractive retirement benefits to help retain top employees and executives.

“You could [give the retirement money] as a yearly bonus, or as a monthly bonus, or it could just be part of the compensation,” Sage said. “[Qualified retirement plans are] one of the tax loopholes that save business owners quite a bit of money, while they look like they’re the hero to the executives because the executives will have more money in their paychecks, and yet the company has less taxes. Everyone wins.

“For one client is particular, it saved them $25,000 to $30,000 a year,” Sage added. “We’re talking a trucking a company with over 1,000 trucks, so it depends on the size of the operation.”

For more information, call Sage at 801-578-8053 (direct) or 801-521-4411 (office).

About the Author

Terrence Nguyen

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