Money Purchase Pension Plans
A Money Purchase Pension Plan allows your company to make annual contributions
that are not tied to profits. In many ways it operates like a profit sharing plan
except you are required to contribute the same percentage of employees' salaries
each year. For added flexibility, offering both a profit sharing and money purchase
pension plan gives you the ability to boost contributions when you want.
Why Provide a Money Purchase Pension Plan?
to a Money Purchase Pension Plan (up to the allowable limit) are deductible for
federal and, in most cases, state income tax purposes. This favorable tax treatment
may provide a reduction in your companys current taxes. If you are self-employed,
contributions are deductible on your personal tax return.
contributions to your Money Purchase Pension Plan account compound tax-deferred
until withdrawn at retirement. Your investment can accumulate more quickly than
in a non tax-deferred investment vehicle.
Generous Contribution Limits
You may be able to contribute as much as 25% of compensation or up to $52,000 in 2014,
whichever is less, to a Money Purchase Pension Plan account.
An Attractive Employee Benefit
business owners may set up a Money Purchase Pension Plan as a way to compete with
larger businesses for quality employees. This popular and highly visible employee
benefit can help you attract and retain the employees you need to succeed in today's
competitive business environment. Unlike large company plans, a Money Purchase
Pension Plan is easy to establish and maintain.
For more information on establishing a Money Purchase Pension Plan,