For small business owners, a traditional 401(k) may not be the best approach to retirement, as it starves the business of needed capital.

1. Small Business Owner Retirement
Perspectives
For small business owners, a traditional 401(k) may not be the best approach to retirement,
as it starves the business of needed capital.
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LAW OFFICE OF DAVID PARKER BLOG
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2.  Small business owners sometimes have a hard time seeing how
owning a small business changes aspects of their lives that
aren’t directly impacted by the business in obvious ways. That
includes retirement planning. According to a recent guest
columnist at Forbes, If you are a small business owner, now
may be the time to start thinking of your business as its own
retirement vehicle, rather than approaching the matter in a more
conventional way. The business itself is a significant asset
requiring attention, and should in most cases be the centerpiece
of NY estate planning and New York asset protection.
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LAW OFFICE OF DAVID PARKER BLOG
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3.  Conventional retirement vehicles such as a 401(k) are really
predicated on the idea of income earned at conventional
employment. A portion of wages or salary diverted into such an
account is taken from consumption in most cases, a way of
deferring gratification in order to provide for a future in which
one will not have a job. But when the money is instead taken
from small business revenues, a business owner typically has to
take out of the business what would otherwise be capital for
growth.
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4.  True, taxes on the money put into the account are deferred, and
it may be that one’s tax bracket will be lower when the money
is withdrawn, but the existence of the business complicates this
otherwise simple calculation. The owner faces a choice of
investments, and the business itself can provide for retirement –
if it does well – just as effectively as a retirement account, or
more so.
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5.  A business owner exists in two worlds and his role as an
individual should never eclipse his role as a businessperson, or
vice-versa. As such, it’s always important to calculate properly
how much investing in the business will likely produce in the
way of returns over time, compared to the retirement account
plus the tax savings. The strategy has some risk to it, but may
be worth considering for those nearing retirement who have a
family business.
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6. Law Office of David Parker
Estate Planning and Elder Law
 www.parkertrustlaw.com