Proper planning can help save you money

BY MATTHEW H. KEELING, CFP

Now more than ever, small businesses are looking for ways to save money without sacrificing service and without laying off employees. Very often, those with small businesses steer away from seeing a financial advisor because they fear it will cost them money. In fact, the opposite is true. Here are some ways a financial advisor may be able to save you money.

Retirement plans
In 2009 business owners can put as much as $49,000 of tax-deductible contributions into defined contribution retirement plans – and if you fit the profile, you may be able to put as much as $150,000 or more into a defined benefit plan. But what if you don’t have that kind of money to save each year but want to save on the costs associated with the plan you have now? Here are some questions to ask:

Do you have an open architecture 401(k) plan that you don’t really need?

You can design a 401(k) plan in many different ways under the IRS and Department of Labor guidelines. You can have vesting schedules, different levels of matching for employees, and even integration formulas for Social Security benefits – but they cost money in administrative costs. In my experience, most companies with fewer than 50 employees really don’t need – or are not using – all the special features built into their 401(k) plans. Using Safe Harbor 401(k) plans or plans with a single investment company could save you hundreds and in some cases thousands of dollars in administrative costs each year.

Do you actually need a 401(k) plan?

If you as the business owner are contributing less than $15,000 a year into your company’s 401(k) plan, maybe you shouldn’t be using that type of plan at all. SIMPLE IRA plans have smaller contribution limits and fewer design options, but they cost as little as $15 per year, per account, and employees pay their own fees.

We all hope for brighter times ahead when you can make that $150,000 retirement plan contribution, but in the meantime maybe some of these tips will help your bottom line. ■


Matthew H. Keeling, CFP®, is principal of Keeling Financial Strategies Inc., located at 759 Falmouth Road, Mashpee, MA. He can be reached at 1-888-811-6781 or matt@keelingfinancial.com.
SECURITIES AND ADVISORY SERVICES OFFERED THROUGH COMMONWEALTH FINANCIAL NETWORK, MEMBER FINRA/SIPC, A REGISTERED INVESTMENT ADVISER.


Published in Cape & Plymouth Business October 2009