I know, you’re completely focused on parenting and keeping your relationship together, getting to work every morning and making sure your to-do list is checked off by Sunday night each week. But sometimes it’s really important to pay attention to the big picture, to what’s coming down the road. And we all have to plan ahead on retirement because at some point your kids will be out of the house, you’ll have downsized the house and you’ll either be not working at all or just puttering in a job that’s just to get you out of the house a few hours a week.
And at that point the critical question will be: what’s your income source?
That’s why it’s so important to think now, while you’re not retired, about pensions and retirement planning.
The first step towards planning is to be able to calculate how much you’ll need when you retire. Mess that up and you’ll be eating a lot of Top Ramen when you’d much prefer popping into the local steakhouse with friends. A good place to start is your bank. You might think of them as just a place to drop off checks and visit the ATM as needed, but just about every bank has retirement specialists who can sit down with you and help figure out your financial needs in five, ten, twenty and more years down the road.
If you’re a business owner, you have another level of complexity because you not only need to be thinking about your own retirement planning, but you might need to — or want to — set up a pension plan for your employees. It’s a sure bet that deferring that isn’t going to make it less expensive, and for some industries, a pension plan is an expectation that the best employees will require to stay with your company.
One popular way to manage your own retirement is to move personal assets into a trust. When you set up a trust, you can also transfer all of your cash assets into this account and have it earn interest over time too. Just make sure it’s a safe, insured investment. A pension or trust fund is not where you want to be aggressively playing the market with high risk equities or similar.
But when you are setting up that pension for your employees, you can’t just set up a trust. You need an Employer Identification Number or EIN from the Internal Revenue Service for the plan’s trust itself. The IRS says:
Retirement Plan Trustees should apply for an EIN for the plan’s trust in order to properly report Form 945 deposits and other income tax withholding information, and provide Form W-9 to requesters of tax identification number certifications.
First step is to apply for an EIN, but really, what’s key is to plan ahead and make the most of the pension plan that’s going to work for you. Many business owners choose to apply for a retirement plan or pension plan trust for the reasons already listed. Imagine, once it’s set up, you’ll never have to worry about the pension plan or your financial future during retirement. You’re covered from start to finish with the right plan for your future and the future of those that you love.
To get started, hop over to IRS EIN TAX ID.com and apply for a TaxID. They’ll help you proceed from that point.
Disclosure: This post was sponsored by irs-ein-tax-id.com and does not necessarily represent the views of the author. You’re also encouraged to do your homework on retirement planning as this post is purely for informational purposes and should not be taken as professional financial advice.