Don’t leave this important piece out of your agribusiness planning.
The year is coming to a close, and 2018 is fast approaching. It’s prime time to focus on end-of-the-year agribusiness planning, both for 2017 taxes and planning for 2018. We shared a list last December to help farms and ranches with the basics of their agribusiness planning, and that list is still a great tool to use for planning with an eye on saving money. Another option that those who own agribusinesses should consider during end-of-year planning is savings from retirement planning. Explore options below and see how retirement planning can save you money.
Agribusiness Planning: Retirement Planning
Contributions to retirement accounts reduce taxable income for the tax year, as long as the contribution is made prior to the annual filing deadline. There are a handful of retirement and planning options for agribusiness owners and their employees. These are tailored to small businesses, over the 401Ks used by larger corporations. Options include:
- Individual Retirement Account (IRA). An IRA can be set up by agribusiness owners and their spouses. They can be set up and paid into by the due date for taxes, usually April 15th. Owners and their spouses can both deposit up to $5,500 for 2017, plus an additional $1,000 if the depositor is over age 50.
- Simplified Employee Pension (SEP-IRA). The SEP-IRA offers higher contribution limits—depending on the earnings for any given year—for owners and employees. The SEP-IRA has been compared to profit-sharing plans in that the owner must fund the same percentage for all eligible employees that they give themselves. Contributions for both the employer and the employees are tax-deductible to the business.
- Savings Incentive Match Plan for Employees (SIMPLE-IRA). Owners and their employers choose a portion of their pay, called elective deferrals, to be deposited into the account on a pre-tax basis. Employers are also required to fund a profit-sharing contribution or a matching contribution, creating an incentive for the employee and, hopefully, loyalty to the agribusiness. The most that can be deferred is $12,500 for 2017, with an additional $3,000 for those over age 50. Contributions must be in the account by the due date of the employer’s tax return.
Speak with a tax specialist or Certified Public Accountant (CPA) for more details on the best options for your agribusiness.
Learn more about year-end financial considerations for your operation including setting goals for the new year and how AgAmerica can help. Contact us to speak with our team of experts when you’re ready to take the financial health of your operation to the next level.