Don’t Forget Your Retirement Plan
I was talking with a new farm client the other day about his estate plan and what struck me the most was not how much farm land value he had accumulated but rather the amount he had tucked away into his retirement plans. This amount was over 6 figures and he had only been contributing for a little more than a decade.
His annual contributions were in the $50,000 range and with a little bit of compounding a tidy sum can result. One of the benefits that arises is the flexibility in your estate planning. This can be a good vehicle to fund charitable intents at death or can be used to help equalize values between farm and non-farm heirs. One drawback is that these funds are subject to income tax when the heirs withdraw them.
We see too many farmers that are land rich and cash poor and with some some care these pension contributions can save you income taxes and make you more liquid.
Paul Neiffer, CPA
Paul Neiffer is a certified public accountant and business advisor specializing in income taxation, accounting services, and succession planning for farmers and agribusiness processors. Paul is a principal with CliftonLarsonAllen in Walla Walla, Washington, as well as a regular speaker at national conferences and contributor at agweb.com. Raised on a farm in central Washington, he has been immersed in the ag industry his entire life, including the last 30 years professionally. Paul and his wife purchase an 180 acre ranch in 2016 and enjoy keeping it full of animals.
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