When it comes to retirement planning for business owners, the conventional path isn't always the most advantageous. At Revonary, we’re firm believers that strategic analysis and creative thinking can unlock significant tax savings while building substantial retirement wealth.
It’s an approach that’s backed by real-world results. One of our clients, a successful single-shareholder S-Corporation owner, had been following traditional retirement planning advice before coming to Revonary. As an extremely successful business owner, he had substantial income, and was able to make maximum annual SEP IRA contributions of approximately $50,000.
While this approach provided some tax benefits by allowing the owner to defer taxes on a percentage of his income, at Revonary, we knew there might be an opportunity to do more.
During a comprehensive review of the client's business operations and personal financial goals, our advisors noticed several key factors:
After careful analysis, Revonary recommended transitioning from a SEP IRA to a Defined Benefit Plan. A Defined Benefit Plan is a qualified retirement plan where the business owner can make significantly larger tax-deductible contributions compared to traditional retirement accounts.
Unlike contribution-based plans, a Defined Benefit Plan calculates allowable contributions based on factors including age, years until retirement, and desired retirement income, often enabling business owners to contribute well over $100,000 annually on a tax-advantaged basis.
This strategy represented a significant shift in approach, but one that aligned perfectly with the client's financial situation and goals.
After implementing this strategy, our client was able to achieve significant tax savings over a number of years, growing their wealth and preparing for retirement far faster than they had before the change in tax strategy.
Here’s an approximate breakdown of the numbers over the six year period the client has currently been running this strategy:
Traditional Approach (SEP IRA):
Revonary's Solution (Defined Benefit Plan):
In all, over the course of six years, this was a move that made for a total tax savings of $330,000, while allowing the business owner to increase their retirement contributions by 4x. The combination of immediate tax savings, accelerated wealth accumulation for retirement, and greater control put our client in a far stronger financial position than at any point in his career.
This case demonstrates how Revonary's holistic approach to tax and business planning can uncover opportunities that might otherwise be missed. By looking beyond conventional solutions and considering each client's unique situation, Revonary helps business owners optimize their tax strategy while building long-term wealth.
“What sets this case apart isn't just the numbers – it's the strategic thinking behind them," explains Bradley Shapiro, Partner at Revonary. "By understanding both the business and personal aspects of our client's financial picture, we were able to implement a solution that dramatically improved their financial position."
The client's success illustrates the value of working with advisors who take a comprehensive view of tax and retirement planning, considering all available options rather than defaulting to conventional approaches.
Think you could benefit from a similar approach? Contact a Revonary advisor today to learn how we can help your business.