A common goal of owners of profitable, closely held small businesses is to minimize income taxes and save for retirement. Given its flexibility as a tax savings vehicle for the owners and employees of the business, the 401(k) retirement plan is a popular choice. Oftentimes these plans do not allow business owners to contribute as much as they would like on their own behalf. A possible solution may be to add a safe harbor 401(k) and cross-tested profit sharing allocation to their plan, perhaps combined with a cash balance plan.
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