James, a long-term client, called me last week to ask about his retirement plan. He owns a successful business and he’s a partner in a second company.
“How does this work? Can I set up a plan for the second company and participate in both?”
“The fact that you have partners in the second venture could be good news,” I explained. “As long as you’re not the sole owner of the other business, you might be able to set up a separate plan for that company, and invest an additional, large tax deduction into that retirement plan.”
Certain rules must be met to ensure that both companies are not treated as one—that could cause the extra contribution to be disallowed—but this is the kind of stuff we specialize in. I’d be happy to take a look.”