Ensuring smooth succession and retirement

Wealth accumulation through retirement plans and business succession planning before retirement are frequent concerns for business owners. This article identifies strategies that can provide business owners with attractive alternatives when addressing these issues. IRC section 412(i) provides an exemption from the complex funding rules laid out in the rest of IRC section 412, which apply to all other defined benefit plans. The 412(i) "fully insured" defined benefit plan offers simplicity, maximum current tax-deductible contributions, and guaranteed retirement benefits. It allows for greater contributions and is exempt from certain funding requirements of other IRC section 412 plans. Business succession for the closely held business can be greatly facilitated through the use of complete business valuation and buy-sell agreements. Stock redemption, cross purchase, and general partnership plans are forms these agreements can take, and the latter can eliminate the disadvantages inherent in the previous two.