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Not All is Dire in the Funeral Business

If you were a fan of HBO’s “Six Feet Under”, you know that funeral homes often are small businesses involving family members and/or a few other employees.  These businesses can be making considerable income.  Recently we helped a financial advisor in Indiana open a Cash Balance Plan for a funeral home.  The business is owned by a couple in their early 50’s who have two employees in their 40’s.  The company already had a Safe Harbor 401(k) and the couple wanted to start contributing more toward their own retirement but didn’t know that other options were available to them.  Although we ran several scenarios in which the owners, Mr. & Mrs. A., could contribute as much as $200,000, they were more comfortable starting with a smaller commitment in 2016 with the intention of increasing it for 2017.   By contributing less than $1500 for each of their employees to the Safe Harbor 401(k)/Profit Sharing plan, the owners can still contribute $60,000 to a Cash Balance Plan for themselves, make salary deferrals of $42,000, and receive profit sharing of $2000 bringing the business’s total 2016 contribution to  $107,000 of which 97% is for the owners.  Because the plans were designed with growth in mind, Mr. & Mrs. A. can increase the $60,000 contribution up to $125,000 in 2017 without amending the plan.

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