Succession planning using retirement plans

This article was originally published on July 10, 2019

While in most cases a business offers retirement plans to benefit employees directly, retirement plans can serve another purpose in the context of succession planning. Because a retirement plan creates a vehicle to which the company can transfer assets (most commonly cash) that then become assets of the plan and its beneficiaries (i.e., the employees) rather than the company, the overall value inside the company is reduced. By reducing business value, retirement plans may help alleviate the issue of finding potential buyers that can afford to purchase a successful closely held business.

When the owners provide services to the company and are beneficiaries of the retirement plans, they are able to facilitate the sale, while still receiving the assets that were set aside. Different types of plans exist, and the best option will depend on a given business’ ownership and employees. This article explores those differences and explains how each plan might aid an overall succession plan.

Let’s Talk!

Call us at (325) 677-6251 or fill out the form below and we’ll contact you to discuss your specific situation.

  • Topic Name:
  • Should be Empty:

This article was written by Anne Bushman and originally appeared on Sep 20, 2021.
2022 RSM US LLP. All rights reserved.

The information contained herein is general in nature and based on authorities that are subject to change. RSM US LLP guarantees neither the accuracy nor completeness of any information and is not responsible for any errors or omissions, or for results obtained by others as a result of reliance upon such information. RSM US LLP assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect information contained herein. This publication does not, and is not intended to, provide legal, tax or accounting advice, and readers should consult their tax advisors concerning the application of tax laws to their particular situations. This analysis is not tax advice and is not intended or written to be used, and cannot be used, for purposes of avoiding tax penalties that may be imposed on any taxpayer.

RSM US Alliance provides its members with access to resources of RSM US LLP. RSM US Alliance member firms are separate and independent businesses and legal entities that are responsible for their own acts and omissions, and each is separate and independent from RSM US LLP. RSM US LLP is the U.S. member firm of RSM International, a global network of independent audit, tax, and consulting firms. Members of RSM US Alliance have access to RSM International resources through RSM US LLP but are not member firms of RSM International. Visit us for more information regarding RSM US LLP and RSM International. The RSM logo is used under license by RSM US LLP. RSM US Alliance products and services are proprietary to RSM US LLP.