Tax Planning & Profit-Sharing for Contractors

Tax Planning & Profit Sharing

As we near the end of the year, you may be looking for unique tax planning and savings strategies for many of your construction clients. Did you know that the Beneco Prevailing Wage 401(k) plan is uniquely designed to help your construction clients boost their retirements AND help with employee retention?

Contractors who work on prevailing wage projects must pay their employees a wage that includes fringe benefits when working on those projects. The fringe benefits amount can be paid as cash wages or used to fund approved benefits programs. How does this help during tax season? Along with significant labor savings on payroll taxes and insurance premiums, utilizing fringe dollars for retirement benefits can also offset profit-sharing contributions!

With proper plan design, contractors can make significant profit-sharing contributions for owners and highly compensated employees with minimal or even zero contributions required for the non-highly compensated employees.

Companies can use these strategies to reward and retain key employees, office staff, and executives at a much lower cost than non-prevailing wage contractors.

How do these strategies help? profit sharing 

Decrease Taxes Reduce Taxes
Companies can reduce corporate taxes by making profit-sharing contributions to their 401k plan.
Maximize Contributions Maximize Contributions
Contractors can utilize fringe dollars in plan testing to maximize contributions to owners and highly compensated employees.
Retain Employees Retain Employees
Contractors can use profit sharing as a retention strategy for key employees and executives.








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This information is not intended to be a substitute for specific individualized tax or legal advice. We suggest that you discuss your specific situation with a qualified tax or legal advisor.