Maximizing Qualified Retirement Plan Contributions for Business Owners

Properly designed qualified retirement plans are a highly effective means for sheltering business owner and self-employed income from taxes, retaining valuable employees, and protecting assets from creditors. Often, small businesses have qualified retirement plans in place, but have not structured their retirement plans to maximize the significant tax benefits available for their owners.

Retirement plans generally fall into one of two categories: defined contribution plans and defined benefit plans. Defined contribution plans include profit-sharing, traditional and Roth 401(k), and safe harbor 401(k) plans. Defined benefit plans include traditional defined benefit plans and cash balance plans.

For 2025, the maximum contribution to a defined contribution plan is $70,000, or, for individuals age 50 or older by December 31, 2025, $77,500 with a 401(k) "catch-up" feature. However, the maximum contribution for individuals ages 60-63 is $81,250 with a 401(k) "catch-up" feature for 2025. Since defined benefit plans consider work history, age, life expectancy, compensation levels, and expected pay-outs, annual contributions to a defined benefit plan can be significantly higher than the amount that can be contributed to a defined contribution plan. Combining plans can help maximize deductible plan contributions on an owner's behalf.

There are additional considerations for qualified retirement plans. Both types of plans require mandatory testing and reporting. Defined benefit plans require actuarial computations. All plans must be updated periodically for legislative changes and must be maintained in both documentary and operational compliance with all applicable laws and regulations. As a tax practitioner or financial adviser, you should understand the best plan or combination of plans for your clients.

Listen as our retirement plan experts review the numerous options available for retirement plan savings, including SEPs, 401(k)s, profit-sharing plans, defined benefit plans, cash balance plans, and the recent changes made impacting retirement withdrawals, including RMDs.

1. Benefits of Qualified Retirement Plans
   1. Maximize tax deductions for owners
   2. Asset protection
   3. Recruit and retain staff
2. 2025 IRS Plan Limits
3. Types of Qualified Retirement Plans
4. Defined Contribution Plans – Laying the Foundation
   1. 401(k) Plans
      1. Traditional 401(k) – Immediate tax deduction / tax-deferred growth
      2. Roth 401(k) – Tax-free growth and withdrawal
      3. ADP testing and top-heavy testing
      4. Safe Harbor designed-based alternative to ADP testing
   2. Profit Sharing Plans – Flexible New Comparability (Cross-Tested) Contributions
5. Defined Benefit Plans – Maximizing Tax Deferral for Business Owners
   1. Traditional Defined Benefit Plans - owner/spouse only
   2. Cash Balance Plans – businesses with staff
6. Legal Update – SECURE Act, SECURE 2.0, etc.
7. Future Trends – How they will impact business owners

The panel will review these and other key issues:

• Recent changes in law, including SECURE Act and SECURE 2.0 Act of 2022
• Coordinating the various IRS limits on deferrals, contributions, benefits, and compensation
• Using new comparability (cross-tested) plans to maximize contributions for relatively older, higher-paid owners
• The benefit of qualified retirement plans over SEPs
• Choosing between a traditional defined benefit plan and a cash balance plan
• IRS Cycle 3 mandatory restatement of defined benefit and cash balance plans
• Case studies of retirement plan structures
• Highlighting the best qualified retirement plan design for various businesses

Learning Objectives

After completing this course, you will be able to:

• Identify various retirement planning vehicles
• Decide which retirement option may be the best option
• Ascertain your in-plan Roth conversion options
• Clear up several misconceptions about ERISA plans

• Field of Study: Taxes
• Level of Knowledge: Intermediate
• Advance Preparation: None
• Teaching Method: Seminar/Lecture
• Delivery Method: Group-Internet (via computer)
• Attendance Monitoring Method: Attendance is monitored electronically via a participant's PIN and through a series of attendance verification prompts displayed throughout the program
• Prerequisite: Three years+ business or public firm experience preparing complex tax forms and schedules, supervising other preparers or accountants. Specific knowledge and understanding of pass-through taxation, including taxation of partnerships, S corporations and sole proprietorships, qualified business income, net operating losses and loss limitations; familiarity with net operating loss carry-backs, carry-forwards and carried interests.

Strafford Publications, Inc. is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of Accountancy have final authority on the acceptance of individual courses for CPE Credits. Complaints regarding registered sponsons may be submitted to NASBA through its website: www.nasbaregistry.org.

IRS Approved Provider

Strafford is an IRS-approved continuing education provider offering certified courses for Enrolled Agents (EA) and Tax Return Preparers (RTRP).