Shokibokigyokyosai or SBA pension plan
Posted: Wed Jul 10, 2024 10:58 am
Hello all,
On occasion I have posted some advice for those seeking it, now its time for me to ask a question. I hope someone here has had a similar experience and can provide some feedback on how the system works. We have an appointment with our accountant so its very possible they can answer the question, but I thought asking here doesn't hurt and perhaps another person can benefit from the information as well.
So here goes, we will start with the specifics;
Owner of a small business for about 20 years. Its a private company.
Tax issues are becoming more prevalent as we have more than one property.
Edging closer to retirement, in fact I am almost finished with my pension contribution payments.
We are fortunate enough not to have money worries so budgeting isn't a major concern.
I own the company, my wife is an employee.
and the situation;
the Small Business Association has an option to set aside income that is tax free, as I understand it. This allows our accountant to do their thing and minimize government taxation. Things start to get a bit sticky when the SBA paperwork suggests we must "buy" in to this option for a period of 20 years OR until we sell the business.
I am wondering if there is any wiggle room with these restrictions.
For example, selling the business to another entity yet retaining a portion of the operation. Or incorporating and putting my name in a new Kabushiki-gaisha. It appears to be a sale (technically) which is part of the questions I have for the accountant...
Have any of you opted for the SBA retirement system ?
If so how old were you ?
If you opted out, did you have any issues canceling ? The paperwork suggests a penalty of up to 20% of the total set aside for cashing out "early".
Since the contract is for 20 years and I am almost at the age where I no longer need to contribute to the pension system, 20 years is pretty much an unreasonable ask.
Other relevant information
The amount we theoretically contribute is variable so if we started at X per month, we could decrease to X-Y in the future. So we are not locked into a premium like an insurance policy.
Any thoughts or points I haven't considered are most welcome
If there is interest, I will post again when I have the accountants answer
Thanks for reading
Best
Paul
On occasion I have posted some advice for those seeking it, now its time for me to ask a question. I hope someone here has had a similar experience and can provide some feedback on how the system works. We have an appointment with our accountant so its very possible they can answer the question, but I thought asking here doesn't hurt and perhaps another person can benefit from the information as well.
So here goes, we will start with the specifics;
Owner of a small business for about 20 years. Its a private company.
Tax issues are becoming more prevalent as we have more than one property.
Edging closer to retirement, in fact I am almost finished with my pension contribution payments.
We are fortunate enough not to have money worries so budgeting isn't a major concern.
I own the company, my wife is an employee.
and the situation;
the Small Business Association has an option to set aside income that is tax free, as I understand it. This allows our accountant to do their thing and minimize government taxation. Things start to get a bit sticky when the SBA paperwork suggests we must "buy" in to this option for a period of 20 years OR until we sell the business.
I am wondering if there is any wiggle room with these restrictions.
For example, selling the business to another entity yet retaining a portion of the operation. Or incorporating and putting my name in a new Kabushiki-gaisha. It appears to be a sale (technically) which is part of the questions I have for the accountant...
Have any of you opted for the SBA retirement system ?
If so how old were you ?
If you opted out, did you have any issues canceling ? The paperwork suggests a penalty of up to 20% of the total set aside for cashing out "early".
Since the contract is for 20 years and I am almost at the age where I no longer need to contribute to the pension system, 20 years is pretty much an unreasonable ask.
Other relevant information
The amount we theoretically contribute is variable so if we started at X per month, we could decrease to X-Y in the future. So we are not locked into a premium like an insurance policy.
Any thoughts or points I haven't considered are most welcome
If there is interest, I will post again when I have the accountants answer
Thanks for reading
Best
Paul
