As we approach year-end, many of you are scrambling to manage your taxes and ensure that while you want to end on a profitable note, you don’t end with so much profit that it all goes right out the window to taxes.
Many of you are prepaying rent and other things, which is a great idea, but if you consistently end the year with over $50,000 in profit, if that’s sort of like that’s a given for you, some years it might be $200,000, some years it might be $51,000. But you typically end the year with about $50,000 or better in profit, one thing that might be worth considering is a defined benefits program. It is basically a private pension program. It’s a great way to not just prepay for things but really to tuck money away for you and your family and for your team rather than just pay excess taxes.
View Video Transcript
Hey, everybody. Drew McLellan here this week coming to you from our home in Denver. You know, as we are rounding the bend on year end, many of you are scrambling to sort of manage your taxes and making sure that while you want to end with a profitable note, you don't want to end with so much profit that it all just goes right out the window to taxes. So I know a lot of you are prepaying rent and other things, which is a great idea, but if you consistently end the year with over $50,000 in profit, if that's sort of like that's a given for you, some years it might be $200,000, some years it might be $51,000. But you typically end the year with about $50,000 or better in profit.
One thing that might be worth considering is a defined benefits program. So the defined benefits program sits on top of a 401k or a Simple IRA, and it allows you to put away a significant amount of money. I'm talking hundreds of thousands of dollars if you have that, in your in your profit at the end of the year for your retirement. It is basically a private pension program. So you would cover your entire employee base. But the way you can build the structure of the payouts, it it does benefit the owner more than it benefits the employees. And so there are some huge advantages tax and retirement sort of stocking money away for agency owners that are worth considering.
One of the challenges with defined benefits programs is that they often require that you – a traditional defined benefits program – that you make the same contribution. So if you made $75,000 contribution in year one, you have to make the same contribution or more for the next five years. The AMI defined benefits program has eliminated that requirement. So for a lot of agencies nobody's going to take that risk. You can't know for sure you're going to have that kind of money. But we've eliminated that. We've worked very hard with the partner to reduce the burden of having to make the same kinds of payments every year. And so you don't have to do that in our program.
By the way, we don't make a dime in our program. We just introduce you to the administrator, take advantage of the buying power of AMI. And we are out of it. So it's not a moneymaker for us, but it is a way for us to take advantage and give you advantage of the AMI community. So if that's something that's of interest to you, reach out to me and I'll make an introduction. But it's a good way to think about sort of year-end taxes. You have until April, or depending on when you file your taxes, September, to fund the defined benefits program for 2024.
So, you know, it's not like you have to have all the money today to do that. You can, just like you do with a 401k, you can you can fund it into the next calendar year. So if you want to learn more about that, reach out to us and we're happy to tell you a little bit more about it and connect you with the administrator, who can explain it in great detail far beyond, our ability to explain it. But it's a great way to not just prepay for things, but really to tuck money away for you and your family and for your team rather than just pay excess taxes. Okay? All right.
Hopefully that's helpful. I'll see you next week.
