Pension Plans and the Small Business Owner

small business and pensions




The Small Business Owner’s Tax Perspective

When an owner of a small business starts thinking about starting a pension plan, like a 401K plan, he or she focuses on the opportunity for tax  deductions and the personal benefit. Providing a great fringe benefit  for the employees is often a secondary consideration.

Further, the person presenting the plan is sometimes a financial planner who is not an expert in issues such as plan design, structure and compliance rules. It does not have to be that way.

It is the author’s opinion and business  observation that 401K plans provide many great opportunities, such as:

  • Inducing good prospective employees to join the company
  • Offering a tax-favored way to save for retirement
  • Providing a good tax deductible way for the owner to put money away for his or her retirement and even to put extra money beyond the level of the employees, in a legal and proper way.


The solution to introducing the best tax deductible savings plan is achieved by the owner reading about 401K plans,  and interviewing and hiring the  most qualified investment advisor, third party administrator, custodian,  CPA and attorney to consult on plan design.

Then, make sure this team is actively coordinating their efforts with the business owner so the best results are achieved for the company, the owner and the employees.

You might think about the old adage: Plan the work, then work the plan.

Related articles:

3 Tactics to Maximize the Benefits of Your 401(k) Plan

Small Business, Corporate Tax and Reinvention Steps

Partnerships, Commercial and Strategic Benefits


About the author

Ray Nowicki

Raymond M Nowicki CPA is managing partner of Nowicki and Company, LLP, a firm with its headquarters in Buffalo, NY with a satellite in Manhattan. Nowicki is a nationally recognized speaker and trainer of CPAs on pension plan auditing, and quality improvement for CPA practices. His firm also audits 401K plans. Ray has helped Nowicki and Company, LLP grow to be one of the top 30 firms in Western New York. In recognition for service to small businesses, New York Governor George Pataki awarded him the Small Business Advocate of the Year Award in 2005. He serves most of the firm clients, especially in a number of specialized areas including estate planning and trusteeship, structuring new business ventures, strategic planning and workouts, and litigation support.