Employer retirement plans form the core of retirement savings of most of the self-employed people and small business owners. Sufficient knowledge of how the employer retirement plan forms the important part of your total retirement plan, is necessary to plan sufficiently for retirement.
Congress understands that employers should be motivated to help people in the retirement planning. It is aware that though many employees recognize the importance of keeping money aside, few realize the connection between their retirement savings and their total retirement plan. Hence Congress today allows employers providing an employer retirement plan to offer Qualified Retirement Planning Services to employees or their spouses as a tax-free fringe benefit.
The retirement planning service is paid by the employer. The cost of the Qualified Retirement Planning Service is not passed on to the employee or regarded as taxable income. Hence this service does not require Social Security, Medicare, or income tax withholding.
High earning employees can disconsider the cost of the service from income, provided the service is given to all the other employees without exception and who are generally educated and informed about the employer plan. However, the IRS can allow employers to limit retirement advice to people in the plan, approaching retirement age.
The Qualified Retirement Planning Services an employer offers can consist of advice and information about retirement planning for a person and/or his spouse and the relation between the employer retirement plan and their overall retirement plan. Employer retirement plans consist of SEPs, SIMPLEs, Profit Sharing Plans, Money Purchase Pension Plans, 401(k)s plans, annuity plans, and 403(b) and 457 plans. But the worth of any tax preparation, accounting, legal or brokerage services offered by the employer must still be considered as the taxable income of the employee.
If you find the idea of using pre-tax money to go for good professional retirement planning advice lucrative, then it is better to consult a qualified financial advisor. A qualified financial advisor can offer detailed information on the Qualified Retirement Planning Services open to you and your spouse.