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Peter Thoms CFA

Case Study: How This Realtor Saved $45,000 on Her Taxes [Video]

For many entrepreneurs and self-employed professionals, the single biggest drain on their income is often taxes, and potentially the best way to help plug this drain is to make large, annual, tax-deductible contributions to an IRS-approved qualified retirement plan called a defined benefit plan.

Defined benefit plans are so powerful for those who qualify for them because they help plan owners to accomplish two important financial goals simultaneously:

  • Significantly reducing their tax bill
  • Rapidly building a large retirement nest egg

Watch below to see how one self-employed realtor can use a defined benefit plan to cut her taxes by $45,000 every year.


Defined Benefit Plans Offer Powerful Advantages

Many entrepreneurs and business owners start off by contributing to 401(k) plans or SEP-IRAs, but the IRS contribution limits for these plans are quite low—much lower than for defined benefit plans.  Hence, defined benefit plans are a much more powerful tax strategy.

More and more, successful small business owners are opening defined benefit plans to significantly cut their tax bills while accelerating their retirement savings.  Some high-income business owners are able to make very large contributions that can enable them to slash their current year tax bill by $40,000, $60,000 or even $100,000, depending on their circumstances.

Unlike 401(k) plans or SEP-IRAs, each defined benefit plan is custom-designed to meet the specific tax reduction and retirement savings needs of the business owner.  The allowable plan contribution is calculated based on several factors, including age, compensation, and years of employment.

Here are several reasons that defined benefit plans are increasingly popular with small business owners and professional practices:

  • Large annual tax deductions for business owners
  • Much higher contribution limits than other retirement plans
  • Flexible structure to meet specific needs of business owners; for example, business partners can have different contribution levels
  • Plans allow employers to offer retirement benefits to their employees while retaining a high degree of control over their contributions
  • Investments grow tax-deferred, building wealth more rapidly
  • Assets are protected in case of lawsuit or bankruptcy
  • At retirement (or plan termination) assets can be rolled into an IRA to continue tax-deferred growth

Will a Defined Benefit Plan Work for You?

So, how do you know if a defined benefit plan is right for your business? Call us at 619.435.1701 or 

Email us:

You can also fill our out short online survey. With just a few pieces of informaton about your business, we will generate a complimentary tax-savings proposal for you.  There is no cost to you for this service and no obligation whatsoever.

A defined benefit plan is not right for everyone, but for those in the right circumstances it can be a very powerful tool for both reducing taxes and building wealth.

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Picture of Peter Thoms, CFA , MBA

Peter Thoms, CFA , MBA

Peter Thoms founded Orion Capital Management LLC in April 2002. Peter has an extensive background in crafting investment solutions for high-income clients in a wide variety of circumstances.

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