Three Ways To Talk To Business Owners About Their Pension Plans

Three Ways To Talk To Business Owners About Their Pension Plans

February 13, 2019

Small business pension plans: most business owners have a love-hate relationship with them. On one hand, they make it possible to set aside large sums of money for retirement and assist them in recruiting and retaining talent. On the other hand, they are complicated, a lot of work, and mistakes can carry hefty consequences.

What most small business owners need is a good financial advisor to come alongside them to guide and help shoulder the burden. The problem is, these small business owners either don’t realize this need or they haven’t come across an advisor that knows more about pension plans than they do.

All you, as an advisor, need is an opportunity to get in front of these business owners and show them what you know and how you can help them. But how do you get an audience with a busy businessman or businesswoman? Here are three things they will respond to that will give you the opportunity to show them how much they need you.

Approaching Deadlines For Their Plan

The IRS has a lot of different deadlines for qualified retirement plans, and it is hard for anyone to keep track of them. If you reach out to a business owner when one of their important deadlines is approaching, they will be grateful for the reminder and it will build your credibility. Especially if they were unaware of the deadline, it will open the door for you to start building a relationship with that potential client.

There are a number of deadlines that you can discuss with your prospects. Anyone wanting to change their 401(k) to a safe harbor plan has to do so by January 1. Also in January, plan administrators must provide census data to the recordkeeper so that they can complete compliance testing by the 15th, and Form 1099-Rs have to go out to everyone who received a distribution by the end of the month. Those same forms have to be filed with the IRS by the end of February.

March 15 is a big deadline for anyone who failed compliance testing. By that date, they have to have all of their corrective distributions taken care of to get back into compliance. Everyone, regardless of their testing results, has to have Form 5500 turned in by the end of March. And April 15 is not only tax day but also the last chance for employers to make contributions for the previous year and still receive a tax deduction for that year.

By the end of September, all plan sponsors have to distribute the Summary Annual Report. Any new safe harbor 401(k) plans have to be launched by October 1 as well. November has deadlines for SIMPLE 401(k) notices and is the time for everyone to prepare for their December 1 safe harbor plan notices.

Finally, December 31 is a big deadline. That’s when a lot of little things need to be taken care of to close out the year and prepare the plan for next year. RMDs must be distributed along with excess contributions, failed tests must be corrected, documents need to be amended if you wish to change to or from a safe harbor plan, and it’s the best time to set up a new plan since deferrals cannot be made retroactively.

Changes To IRS Rules That May Affect Their Plan

Another subject you can bring up to get the attention of small business owners is changes to IRS rules that could affect their plans. Not only did contribution limits increase for 2019, but there are a number of other changes brought about by the Tax Cuts & Jobs Act, like extended rollover deadlines for plan loan offset amounts and expanded exceptions to the 10% early withdrawal penalty for some federal workers.

The IRS is always issuing notices and updates regarding pension plans, and it is hard for small business owners to stay abreast of them on their own. This is one area where you can showcase your value to a potential client early on in the relationship.

Strategies To Save More Before Retirement

If you work with business owners, you know that many of them put off saving for retirement in order to first build their business. As such, they are often late to the retirement saving game and looking for ways to catch up beyond the paltry IRA contribution limitations.

This is where your expertise as a financial advisor can be perfectly paired with their pension needs. They expect you to know how to build up a nest egg once they get going. If you can show them the right vehicle that will enable them to get on track, they will be more likely to turn to you to manage their nest egg in the long run.

There are a number of different kinds of pension plans that can help them save more for retirement. If all they have right now is an IRA, then a 401(k) or SIMPLE 401(k) might be enough to help them get the ball rolling. If they’re looking for more firepower, a SEP IRA or adding in profit sharing is a good idea. For those clients getting close to retirement age with a lot of ground to make up, a cash balance plan combined with profit sharing allows the highest possible contributions, with deferrals sometimes exceeding $300,000 a year.

Let’s Keep Talking

These are just a few ways that you can open the door to discussing pension plans and the services you provide to business owners. Business owners are looking for financial advisors to work with, but they need professionals who can help them with both personal finances and the business. If you work with business owners and want to partner with a pension consultant in order to provide the highest possible level of service to your clients, email us at FinancialFocus Retirement Plan Services today at

About Kenny Phan

Kenny Phan is a Managing Partner at FinancialFocus Retirement Plan Services, a 3(16) fiduciary. He works as a pension specialist who partners with financial professionals to design and implement pension plans. His area of expertise is customized defined benefit, defined contribution, and 401(k) plans. Serving financial advisors and businesses in the greater Phoenix area, he is supported by FinancialFocus Retirement Plan Services. Together, they provide comprehensive plan design consultation, administration, document installation, compliance testing, as well as IRS and DOL reporting for qualified retirement plans.