Personal Pension Plans for Business Owners

Building Your Future: The What, Why, and How of Personal Pension Plans for Business Owners

As a business owner, your focus is often on the present — managing operations, growing your enterprise, and ensuring its success. However, planning for your future is equally crucial, and a key aspect of that planning is developing a Personal Pension Plan (PPP). In this article, we’ll explore what a Personal Pension Plan is, why business owners should consider having one, and provide a step-by-step guide on how to develop a robust PPP.

What is a Personal Pension Plan (PPP)?

A Personal Pension Plan (PPP) is a retirement savings strategy designed specifically for business owners who want to supplement their traditional retirement savings. Unlike conventional retirement plans such as 401(k)s or IRAs, a PPP provides more flexibility and control, allowing business owners to tailor their retirement savings to their unique financial situations and goals.

Why Consider a Personal Pension Plan?

Flexibility and Control: One of the primary reasons business owners opt for a PPP is the flexibility it offers. Unlike traditional retirement plans with contribution limits, a PPP allows for greater flexibility in determining contribution amounts. Business owners can adjust their contributions based on the financial performance of their businesses, providing adaptability during both prosperous and challenging times.

Tax Advantages: PPPs offer tax advantages that can significantly benefit business owners. Contributions to a PPP are tax-deductible, reducing the taxable income for the business. Additionally, the earnings on the PPP investments grow tax-deferred until withdrawals are made during retirement, potentially resulting in lower overall tax liabilities.

Wealth Accumulation: A well-structured PPP can facilitate accelerated wealth accumulation. By consistently contributing to the plan and strategically investing its assets, business owners can build a substantial nest egg for retirement. This wealth accumulation can provide financial security and support the lifestyle they envision during their post-work years.

Asset Protection: PPPs often come with creditor protection features, safeguarding retirement assets from business-related or personal liabilities. This protection can be crucial for business owners, especially in industries prone to legal challenges or economic downturns.

Succession Planning: Integrating a PPP into your overall financial strategy can enhance succession planning. It provides a structured method for transferring wealth to family members or successors, ensuring the continuity of the business and securing the financial future of the next generation.

How to Develop a Personal Pension Plan:

Step 1: Assess Your Financial Situation and Goals

Before establishing a PPP, conduct a comprehensive assessment of your current financial situation and retirement goals. Consider factors such as your desired retirement age, lifestyle expectations, and the financial needs of your dependents. This assessment will serve as the foundation for designing a PPP that aligns with your unique circumstances.

Step 2: Engage Professional Guidance

Developing a PPP involves navigating complex financial and legal landscapes. Engage with financial advisors, tax professionals, and legal experts who specialize in retirement planning for business owners. Their expertise can help you understand the intricacies of PPPs, maximize tax advantages, and ensure compliance with relevant regulations.

Step 3: Choose the Right Plan Structure

There are various PPP structures available, each with its own set of rules and benefits. Common options include Individual Pension Plans (IPPs), Retirement Compensation Arrangements (RCAs), and Customized Pension Plans. Work with your financial advisor to determine the most suitable structure based on your business structure, income levels, and retirement objectives.

Step 4: Establish Contribution Guidelines

Determine how much you can comfortably contribute to your PPP on a regular basis. This decision should be informed by your financial assessment and should take into account the variability of business income. Establishing contribution guidelines provides a clear framework for consistent savings and wealth accumulation.

Step 5: Investment Strategy

Develop a robust investment strategy for your PPP. Consider factors such as risk tolerance, time horizon, and retirement goals when selecting investment vehicles. Diversification is key to managing risk and optimizing returns. Work with a financial advisor to create a well-balanced portfolio that aligns with your long-term objectives.

Step 6: Monitor and Adjust

A PPP is not a set-it-and-forget-it solution. Regularly monitor the performance of your plan and adjust contributions and investments as needed. Life circumstances, business conditions, and market fluctuations may necessitate modifications to ensure your PPP remains aligned with your evolving financial landscape.

Step 7: Stay Informed About Regulatory Changes

The regulatory landscape surrounding retirement plans is subject to change. Stay informed about any updates or modifications to tax laws, pension regulations, and other relevant policies that may impact your PPP. Your financial advisor can help you navigate these changes and make necessary adjustments to maintain compliance.

Step 8: Integrate with Overall Financial Planning

A PPP is just one component of your overall financial plan. Integrate it seamlessly with other financial strategies, including estate planning, tax management, and risk mitigation. A holistic approach ensures that all aspects of your financial life work together harmoniously to achieve your overarching goals.

A Personal Pension Plan is a powerful tool for business owners seeking to secure their financial future in retirement. By providing flexibility, tax advantages, and wealth accumulation opportunities, a well-structured PPP can be a cornerstone of a comprehensive retirement strategy. Engage with financial professionals, carefully assess your financial situation, and take proactive steps to develop a PPP that aligns with your unique goals. With careful planning and ongoing management, a PPP can pave the way for a fulfilling and financially secure retirement for business owners.

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Supplementing Your Retirement Income

Securing Your Finances During Your Golden Years

Retirement is a significant milestone, but it often comes with financial challenges. With increasing life expectancies and the uncertainties of economic landscapes, relying solely on traditional pension plans and Social Security may not be enough to maintain your desired lifestyle. Supplementing your retirement income in other ways becomes essential for financial security and peace of mind. The strategies below can help to bolster your retirement income, ensuring a comfortable and worry-free post-work life.

Embrace the Gig Economy:

The gig economy has transformed the way people work, offering flexible opportunities for those looking to supplement their income. Whether it’s freelancing, consulting, or participating in the sharing economy, consider leveraging your skills and expertise for additional earnings. Websites and platforms dedicated to freelancers and gig workers provide a plethora of opportunities across various industries.

Downsize and Monetize Assets:

Consider downsizing your living space and monetizing assets to free up cash for retirement. If you own a large home, selling it and moving to a smaller, more affordable residence can generate funds for your retirement years. Additionally, unused or underutilized assets such as a second home, recreational vehicles, or collectibles can be sold to add to your financial cushion.

Real Estate Investments:

Real estate can be a lucrative avenue for supplementing retirement income. Rental properties can provide a steady stream of passive income, and real estate values tend to appreciate over time. Research potential investment properties carefully, considering factors such as location, market trends, and potential rental income. Real estate investment trusts (REITs) offer another option for individuals looking to invest in real estate without the responsibilities of property management.

Explore Part-Time Employment:

Part-time employment can be an excellent way to stay active, engaged, and supplement your retirement income. Look for opportunities that align with your skills and interests, and explore options with flexible schedules. Many industries, including retail, education, and consulting, value the experience and expertise of retirees.

Invest Wisely:

Proper investment strategies are crucial for maximizing your retirement income. Diversify your investment portfolio to manage risks and capitalize on potential returns. Consider consulting with a financial advisor to develop a well-balanced investment plan that aligns with your risk tolerance, time horizon, and financial goals. A mix of stocks, bonds, and other investment vehicles can provide a steady income stream during retirement.

Start a Side Business:

If you have a passion or a hobby, consider turning it into a small business. The digital age has made it easier than ever to start and run a business from the comfort of your home. Whether it’s selling handmade crafts, offering consulting services, or starting an online store, a side business can generate supplemental income while allowing you to do something you enjoy.

Tap into Home Equity:

Homeownership can be a valuable asset in retirement. Consider tapping into your home equity through a reverse mortgage or a home equity line of credit (HELOC). These options allow you to convert a portion of your home’s value into cash without selling the property. However, it’s essential to carefully evaluate the terms, risks, and potential impact on your long-term financial stability.

Delay Social Security Benefits:

While Social Security benefits are available as early as age 62, delaying them can result in higher monthly payments. For each year you delay beyond your full retirement age, your benefit increases. If possible, consider waiting until age 70 to start receiving Social Security, as this can significantly enhance your monthly income during retirement.

Health Savings Accounts (HSAs) for Retirement:

Health Savings Accounts are designed to cover qualified medical expenses, but they can also serve as a powerful tool for retirement savings. Contributions to an HSA are tax-deductible, and withdrawals for qualified medical expenses are tax-free. If you don’t use the funds for medical expenses during your working years, you can withdraw them penalty-free for non-medical expenses in retirement.

Annuities for Guaranteed Income:

Annuities are financial products that provide a guaranteed stream of income in retirement. While there are various types of annuities with different features, some offer fixed payments for a specified period or even for life. Annuities can provide peace of mind by ensuring a stable income source, but it’s crucial to carefully review the terms and consider consulting a financial advisor before making this commitment.

Supplementing your retirement income requires careful planning, a diversified approach, and a willingness to explore new opportunities. By embracing the gig economy, downsizing, investing wisely, and tapping into various income streams, you can build a robust financial foundation for your retirement years. It’s essential to stay informed, adapt to changing economic landscapes, and regularly reassess your financial plan to ensure that it aligns with your goals and aspirations. With thoughtful consideration and strategic decision-making, you can enjoy a secure and fulfilling retirement without the constant worry of financial constraints.

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College Bound does not have to mean Financially Strapped

Smart Strategies to Afford Sending Your Kids to College

Sending your kids to college can be a rewarding but financially challenging endeavor. Rising tuition costs and other associated expenses – for things like clothing, dorm equipment, textbook fees, meal plans, spending money, etc., many families can find themselves grappling with the daunting task of trying to fund a college  education without draining their bank accounts. If this describes you, there are some strategic approaches and resources available that can help parents navigate this financial maze and send their kids to college without going broke.

Start Early: The Power of Savings:

One of the most effective ways to avoid financial strain when sending your kids to college is to start saving money early. Establishing a college savings fund, such as a 529 plan, can provide tax advantages and ensure that there’s a dedicated pool of funds when the time comes for your child or children to decide if they want to attend a college or university. By contributing regularly to this fund, parents can take advantage of compound interest, allowing their savings to grow over time.

Explore Financial Aid Options:

Don’t shy away from exploring financial aid opportunities. The Free Application for Federal Student Aid (FAFSA) is a crucial tool in determining eligibility for various federal aid programs, including grants and loans. Additionally, many colleges and universities offer their own financial aid packages, scholarships, and work-study programs. Encourage your child to actively seek out scholarships and grants, as there are numerous opportunities available based on academic achievements, extracurricular activities, and community involvement.

Work-Study Programs and Part-Time Employment:

In addition to traditional financial aid, work-study programs and part-time employment can help cover college expenses. Many universities offer on-campus employment opportunities that align with students’ fields of study. These programs not only provide financial support but also offer valuable work experience, contributing to students’ resumes upon graduation.

Community College and Transfer Programs:

Opting for community college during the first two years of college can significantly reduce overall costs. Community colleges typically have lower tuition fees, allowing students to complete general education requirements at a fraction of the cost. After completing these foundational courses, students can then transfer to a four-year institution to complete their degree. This approach can result in substantial savings while still earning a bachelor’s degree from a reputable institution.

Consider Online and In-State Universities:

In-state universities often offer lower tuition rates for residents, making them a cost-effective choice for many families. Additionally, exploring online degree programs can provide flexibility and cost savings, allowing students to pursue their education while potentially working part-time or fulfilling other responsibilities. This approach is particularly beneficial for non-traditional students or those who prefer a more flexible learning environment.

Encourage Responsible Borrowing:

While loans may be a necessary component of financing college, it’s crucial to encourage responsible borrowing. Help your child understand the long-term implications of student loans and encourage them to prioritize federal loans over private loans due to lower interest rates and more flexible repayment options. Emphasize the importance of budgeting and only borrowing what is absolutely necessary to cover educational expenses.

Utilize Employer Tuition Assistance Programs:

Many employers offer tuition assistance programs as part of their benefits package. If you or your spouse is employed, inquire about available opportunities for financial support for your child’s education. Some companies may provide reimbursement for tuition expenses or offer scholarships for the children of employees.

Take Advantage of Tax Credits and Deductions:

Explore available tax credits and deductions related to education expenses. The American Opportunity Credit and the Lifetime Learning Credit are examples of tax incentives that can help alleviate the financial burden of college costs. Familiarize yourself with the eligibility criteria and ensure that you maximize the available tax benefits.

Sending your kids to college without going broke requires careful planning, resourcefulness, and a proactive approach to financial management. By combining some of the strategies above, families can significantly reduce the financial burden associated with higher education. Encourage your child to actively participate in the search for scholarships and consider alternative education models, such as online or in-state universities. With a well-thought-out financial plan and a commitment to responsible borrowing, you can provide your children with the gift of education without sacrificing your financial well-being.

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An Annual Review of Your Policies can Save You Money

Many people think of March and April as the time of year for Spring Cleaning.  The snow and ice begin to melt away and we start to think about spending more time outdoors.  We look at things that we need to to outside in our yards for annual maintenance, and we begin to prepare for tax season – where we look at our financial documents for the year and assess our financial ‘health’.   It’s also a great time of year to conduct an annual review of your insurance policies.

Our lives change on an ongoing basis, so it’s important that your insurance coverage changes as well.  How long has it been since you last assessed your policies?  Our team at Bieritz Insurance wants to make sure you are not overpaying for your policies and we also want to make sure you are not under-insured.  When you conduct a review of your insurance, you might find out that there are increases, deductions or discounts.

Things that can impact your rates are things like a new baby in your household, additions or improvements that you have made to your home, property that you may have inherited, recreational vehicles that you have purchased or sold, a college student who is renting an apartment, or maybe you have reached retirement age.  There are other things as well: new drivers in your household, real estate market changes, landscaping changes, etc.

Typically, we understand that our assets change over time. What we don’t usually think about is that the value of those assets change as well.  If your home has appreciated in value, you need to make sure that your insurance coverage allows for this increase in value in case of catastrophic loss.  If you purchased your home at $250,000 ten years ago, and the value has since appreciated to $300,000, you want to make sure that your insurance policy will cover you for a $300,000 loss in case of a catastrophic event.  In other words, if your coverage hasn’t been updated since you purchased your home, your insurance value might not cover full replacement if your home value has increased.  In this instance, a review of your policy might increase your policy payments, but you are assured of having the coverage that is right for you.

There are other instances where your policy payments might decrease.  Maybe you installed a home security system or an emergency battery backup for your sump pump or perhaps you have hit an age milestone that would qualify you or members of your family for additional discounts on your auto insurance policies.

A look through your policies on an annual basis can help you find these things and can ultimately save you money on your policy premiums.    Whether you are a current client or maybe just looking for some cost comparisons as part of your process, you can contact us in Cooperstown at  607-547-2951 or in Morris at 607-263-5170 to schedule an appointment for a review!  In most cases, we can save you money.  We work with over 20 companies so that we can find exactly the right products to fit your needs at the right price for your budget.


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Home and Household Tax Deductions

tax-468440_640With just a little more than a month left for filing tax returns this year, it’s a good time to think about what things might qualify for an extra deduction.  In addition to your mortgage and some loan interest payments, some of your 2015 household improvements might be deductible.  

Home improvements eligible for deduction or tax credit include:

  • Installation of new storm doors or energy-efficient windows, insulation, air-conditioning or heating systems can qualify for an energy efficiency tax credit of 10% or up to $500 ($200 maximum towards windows).

  • Renovations and improvements to your home due to a medical condition may be tax deductible.

  • Solar and wind power systems can qualify for as much as 30% of the equipment cost and installation under the renewable-energy tax credit.  This credit will continue into next year for systems that are installed before the end of December 2016.

Home office tax deductions:

  • Home office deductions for those who work from home can include deductions for expenses relating to a qualified office for things like phone lines, heating, electricity, and renovations as well as a portion of your mortgage interest, property taxes and insurance.

Household education deductions (for children attending college or for your continuing education expenses):

  • The American Opportunity tax credit is worth up to $2500 per  year for qualifying expenses related to the first four years of higher education.  Student must be enrolled in a degree or credential program.  The Lifetime Learning Credit, $2000 per year, is not restricted to the first four years of school.  There is also a Tuition and Fees Deduction – for up to $4,000.

If any of these items apply to you in 2015, be sure to check with your accountant to see if you are eligible for any of these deductions.  Don’t forget to provide documentation. Also, make sure that any improvements to your home are documented for your homeowners insurance.  If you have questions about this, please contact our team at Bieritz Insurance in Cooperstown at 607-547-2951 or in Morris at 607-263-5170.  We are happy to assist you!


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FEMA News:4 Reasons to Submit Loan Application Now

TRENTON, N.J. — Hurricane Sandy survivors who register for federal disaster assistance may be referred for a U.S. Small Business Administration (SBA) low-interest long term disaster loan.  The loans can go to homeowners, renters, business, and non-profit agencies to pay for disaster-caused damages not covered by insurance.

Hurricane Sandy survivors who receive an SBA loan application should complete it now, because there are potential benefits that can happen as a result.

They would have readily-available funds for hidden damage that may be discovered after the initial inspection.

  • Applicants may be automatically referred to other disaster assistance programs for which survivors may be eligible if they are turned down for a loan.
  • The initial estimate of the cost of repair may prove inadequate for the work that is actually required, and the loan funds could cover the difference.
  • A survivor’s insurance policy or settlement may not cover all repairs, replacement or rebuilding costs and the loan funds could be used to fill that gap.

The SBA loans are low-interest, and long-term. In some cases, SBA can refinance all or part of an existing mortgage. SBA loan officers work to come up with a plan that fits a survivor’s budget.

Loans of up to $200,000 are available to eligible homeowners to repair or replace disaster-damaged or destroyed real estate. Homeowners and renters may apply for loans of up to $40,000 for personal property, including clothing, furniture, cars or appliances.  Loan amounts cannot exceed uninsured losses.

Businesses and private nonprofit organizations may borrow up to $2 million to repair or replace real estate, machinery and equipment, inventory and other business assets that are not fully covered by insurance.

Interest rates are as low as 1.688 percent for homeowners and renters, 3 percent for non-profit organizations and 4 percent for businesses with terms up to 30 years.  Loan amounts and terms are set by the SBA and are based on each applicant’s financial condition.

Applicants may apply online using the Electronic Loan Application (ELA) via SBA’s secure website at  Applications can be downloaded from . For more information, call the SBA’s toll-free line at 800-659-2955. If you use TTY, call 800-877-8339.

Individuals can register for assistance and follow up on previous applications by registering online or by web-enabled mobile device at By phone or 711/VRS, you can call 1-800-621-FEMA (3362) or TTY 1-800-462-7585.

The SBA has also opened ten Business Recovery Centers throughout New Jersey to help survivors.

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