Entrepreneurs spend years building their businesses but often forget to build their retirement plan. In this episode of Executive Connect, host Melissa Aarskaug sits down with Matt Ruttenberg, co-founder of Life Inc. Retirement Services, to discuss why business owners delay planning for retirement and how to fix it.

Matt explains how to build a retirement plan stack tailored to your business, combining 401(k)s, profit-sharing, and defined benefit plans to maximize tax efficiency and wealth growth. He shares the biggest mistakes entrepreneurs make with their retirement planning, why “set it and forget it” doesn’t work, and how to build a trusted advisory team that communicates effectively to protect your future.

If you’ve ever said “I’ll figure out retirement later,” this episode shows you exactly what to do next — and why waiting could cost you hundreds of thousands in taxes and missed compounding opportunities.

Chapters:
00:00 Why entrepreneurs delay retirement planning
01:20 The wake-up moment when business owners realize they need a plan
02:25 Building a customized retirement plan stack
04:00 How entity type impacts your retirement options
05:30 The two key questions every business owner must answer first
06:40 How to use retirement planning to reduce taxes
08:10 Pretax vs. Roth contributions explained
09:45 How to reinvest tax savings to accelerate wealth
11:00 Why entrepreneurs need a coordinated financial team
12:15 The “general practitioner” and “specialist” analogy for your financial advisors
13:00 Common 401(k) misconceptions that cost business owners money
14:40 Why cookie-cutter plans fail and custom designs save you thousands
16:00 How to find the right retirement plan partner
17:30 Prototype vs. custom plan documents explained
19:00 What questions to ask before hiring a retirement specialist
20:15 Why ongoing consultation matters as your business evolves
22:00 The hidden fees to avoid and how amendments should work
23:10 The importance of agility as your business grows
24:00 How to prepare for deadlines and optimize timing
25:00 Where to start if you’re ready to take retirement planning seriously
26:00 Final advice for entrepreneurs ready to build lasting wealth

Matt

(0:00) They should be communicating because they don’t know all of it. (0:03) You should have a quarterback. (0:04) It’s like having your general practitioner and then you have all these specialists and they’re not communicating.

(0:08) You’re losing money. (0:09) How much is it every time I need to do an amendment to my plan? (0:12) If it’s going to be a fee, then you might want to talk to another person.

(0:16) Like I said, daily, business is involved. (0:18) You have to be able to mend your plan along with it if things change. (0:23) The IRS doesn’t care about you, to be honest with you.

Melissa

(0:25) The owners of the company, Entrepreneurs, let’s get real for a second. (0:30) You’ve got the hustle, you’ve got the vision, the caffeine, but do you have a retirement plan? (0:37) If your idea of a retirement strategy is sell the business and hope for the best, then stick around because today’s guest, Matt Ruttenberg, co-founder of Life, Inc.

(0:48) Retirement Services is here to share some insights with you. (0:53) He’s here to help you stop winging it with your financial future and start building a retirement plan that’s actually built for how entrepreneurs work and live. (1:04) Let’s unpack the 401k without the 401 confusion.

(1:09) Welcome, Matt.

Matt

(1:12) Thanks, Melissa. (1:13) I appreciate you having me on.

Melissa

(1:15) Today, we’re talking about something most entrepreneurs avoid until it’s way too late, the retirement planning. (1:24) Matt, tell us a little bit about how you started in this field and let’s get the elephant out of the room at the beginning. (1:34) Why are so many entrepreneurs putting off and ignoring retirement planning?

Matt

(1:40) That’s a really good question. (1:43) We talk to a lot of business owners. (1:45) I think it’s because they put it off, but that’s okay.

(1:50) I always say it’s okay because they’re looking down. (1:53) They’re building their baby for decades even. (1:58) Then they look up and all of a sudden, they have a profit.

(2:01) They’re like, what do I do with this money or how do I diversify all my money from outside of this one micro company for the most part and start putting it elsewhere? (2:14) Most of it’s tax-driven. (2:17) They’re trying to get their taxes in order.

(2:20) What we do is we build these retirement plan stacks. (2:23) That’s one of the first steps to do. (2:25) They look up.

(2:26) They have this profit. (2:27) All of a sudden, they’re like, oh, shoot. (2:30) My CPA is telling me to do this.

(2:31) My CPA is telling me this. (2:32) This is one of the first things you got to take care of.

Melissa

(2:37) Yeah. (2:37) Let’s get to the good stuff. (2:39) What type of retirement plan should entrepreneurs be looking at and how do they know which one fits?

(2:45) I know personally, there’s so many, Solo K, SEP IRAs. (2:49) Where do we start?

Matt

(2:51) Yeah. (2:52) It’s so vast. (2:53) It’s such a vast world.

(2:55) You start getting online and trying to Google things and what’s this and what’s that, which one makes sense for me, what entity structure do I have. (3:03) The reality is it should be a combination or it could be a combination of all these different things. (3:11) You say simple, you say SEP, there’s 401k, there’s safe harbor, profit sharing, defined benefit.

(3:18) What is it? (3:19) At the end of the day, it’s none of them. (3:22) Nobody’s should be the same.

(3:25) Your retirement plan stack is what we call it. (3:28) We build these retirement plan stacks and it’s completely based on what your business looks like. (3:34) No business is the same, so no retirement plans should be the same.

(3:38) It’s stacking. (3:39) As your profit builds, you start stacking these plans on top of each other. (3:44) But part of that equation is do I have employees?

(3:49) What am I, an S-corp? (3:50) Am I C-corp? (3:51) Am I LLC?

(3:52) Am I just a sole proprietorship with no entity, but I’m just a 1099, so I file a schedule C? (3:59) What is it? (4:00) What are we looking at?

(4:01) It all comes down to what is it that you as the owner want to do? (4:06) We simply just ask two questions. (4:09) One is, why are you talking to me?

(4:12) What are we here for? (4:14) Are you here for, is it you or is it your employees? (4:17) If you don’t have employees, that’s easy.

(4:18) You know the answer to that. (4:20) The second question is, what are we earmarking? (4:23) Are we trying to stockpile as much as humanly possible?

(4:27) Are we just a certain dollar amount or are you reinvesting in your company? (4:33) That drives it down. (4:35) This is what your retirement plan stack looks like.

(4:37) The 401k, the profit sharing, advanced plan options that get you well into the six digits are available. (4:44) It’s a legitimate option. (4:47) It’s just all about, it’s always about the owner, always about the owner.

(4:51) The tax code is built for the owner. (4:54) There’s 7,000 pages of the tax code. (4:58) We’re working with one or two or three.

(5:01) How does it connect to all these other tax codes? (5:04) You just have to take care of your employees first. (5:06) It’s like, let’s check off that box.

(5:09) The IRS doesn’t care about you, to be honest with you, the owners of the company. (5:12) You’re considered highly compensated. (5:14) They want to make sure that your employees are taken care of and then you can go all in.

Melissa

(5:20) Ready to lead smarter and invest wiser? (5:24) On the Executive Connect podcast, we unpack executive strategies for wealth and influence. (5:31) Hit the subscribe button now.

(5:33) Don’t just watch, act. (5:35) Yeah. (5:36) When I think of taxes, I think of my biggest expense that I have to date is the taxes I pay.

(5:43) And so I often am looking for different investments that give me the best peace of mind and the best tax write off. (5:50) So can you talk a little bit about what are the actual benefits of having a solid retirement plan younger rather than later?

Matt

(6:02) Yeah. (6:02) In the entrepreneur side of the world, it’s taxes. (6:07) Business owners care about two things.

(6:08) It’s growing their business and taxes. (6:11) Those are the number one and two. (6:13) And we need to make sure that those two things are taken care of when we’re building out this retirement.

(6:20) This is all we do. (6:21) We’re not financial planners. (6:23) We just build these retirement plan stacks for the company.

(6:26) And the tax part of it is number one. (6:31) And we have to build this out to where that part is taken care of. (6:36) Then we start talking about the investments inside of it.

(6:39) That’s a whole other conversation. (6:41) 401K, 401A, if you want to be even more broad, has nothing to do with investments. (6:47) It has to do with how your money is taxed.

(6:51) And then the earlier, the better, because compound interest obviously is very important. (6:57) But at the same time, that’s later in the conversation. (7:01) That’s step two, is what kind of investments do you want to invest in?

(7:05) Just stocks, bonds, mutual funds, index funds, the basics? (7:09) Or do you want to get into cryptocurrency? (7:12) Or do you want to get into real estate?

(7:14) Do you want to be a private lender? (7:15) And all that’s allowed inside of your plan. (7:17) But you have to get the money in first.

(7:20) And that’s where we really start having fun, is building this actual retirement plan stack. (7:27) And I guess I should probably take a step back on what am I talking about with a retirement plan stack? (7:33) Imagine an upside down tiered wedding cake.

(7:36) This is your retirement. (7:37) So the bottom layer is your 401K. (7:40) Or it could be a set buyer.

(7:42) It could be simple. (7:43) But then as you start creating more profit into your business, then we start profit sharing is level two. (7:49) Defined benefit, executive benefits on top of that.

(7:52) So you just keep building. (7:54) The 401K is the smallest portion. (7:57) And that’s the 23,500 that everyone, we all know and love, right?

(8:02) But we’re building plans out that are getting, if you have employees, over a million dollars per year into this plan. (8:09) Even with just a few employees, you can get very high into the six digits when you design these right. (8:16) And then you figure out the investments.

(8:18) Then you figure out, okay, where’s this going to take me beyond that? (8:21) And how much do you want to earmark towards tax efficient, you know, pre-tax, the Roth component, all that. (8:31) And then the investments are after that.

Melissa

(8:34) Yeah. (8:34) And I think as an employee too, the tax deferral is so important investing in these, you know, when your income is larger, when you’re, you know, making more money versus when you retire. (8:46) So the benefit too is the tax deferral.

(8:49) I know, you know, investing younger in theory, you’re making more money now versus when you retire. (8:57) So deferring that tax, I always think it’s such an important tax strategy for me personally.

Matt

(9:03) I agree. (9:05) I agree. (9:06) I think, I think that it’s, that’s a very split opinion, believe it or not, in, in, in your income level.

(9:15) It’s, it’s interesting. (9:17) Some of the, some of the higher income business owners that we work with, they’re all about Roth. (9:25) They want the Roth, right?

(9:26) So, which you do not get the deduction on, but it’s all the growth ends up being tax-free. (9:32) Assuming you, you know, check off all the boxes, you wait until 59 and a half. (9:37) So we have business owners who are simply just stockpiling just so they can convert it over to Roth.

(9:42) But at the same time, I also have another, you know, other very, very high income entrepreneurs that are like, no, I need all pre-tax. (9:49) I need all pre-tax so I can reinvest the money that I’m, the taxes that I’m saving. (9:54) And that’s, if you have, if you’re able to have that, well, I’m saving a hundred grand on my taxes.

(9:58) I’m saving 200 grand. (10:00) You reinvest that. (10:01) And that’s super important because then you’re, you’re almost doing the rich dad, poor dad.

(10:06) You’re, you’re, you’re creating these assets out of other assets, out of this, these savings that you’re creating. (10:12) And, and it’s funny, it’s, it’s a 50, 50 split out there. (10:17) And it’s which, which philosophy do I go with?

(10:19) It’s funny.

Melissa

(10:20) It’s funny. (10:21) One of my advisors always tells me, Melissa, it’s due for get one free. (10:27) So I love that you said that because I think deferral and my advisor thinks, Melissa, don’t worry about the deferral.

(10:35) It’s due for get one free. (10:37) And I’m like, okay, I get free. (10:39) I’ll, I’ll, I’ll write houses money on the next thing.

(10:42) So I think you’re spot on. (10:43) I think talking to your CPA or financial advisor about these savings is really key. (10:49) I know I, the first time I started talking to them I was thinking, you know, one thing and they’re, they’ve completely schooled me on a whole other way of taxing.

Matt

(11:00) It’s funny. (11:00) It’s, it’s really, it’s like, okay, which perspective do I look at it from? (11:05) And like I said, this is, do you do Roth?

(11:09) Do you do pre-tech? (11:09) That is one decision out of 7,000 pages, right? (11:14) Out of the IRS code.

(11:15) How does it connect? (11:17) And having a good team, like you have an advisor, if you don’t have a team, if you’re a business owner and you don’t have your team set up, I mean, you, you have to do that. (11:26) You have to do that.

(11:27) You have to have people you trust and boundside and they all have to communicate. (11:31) They should be communicating because they don’t know all of it. (11:35) You should have a quarterback and then a huge specialist.

(11:37) It’s like having your general practitioner, uh, from the medical side of it. (11:41) And you have all these specialists and if they’re not communicating, you could end up, you’re missing, you’re losing money. (11:47) You’re absolutely losing money that way.

Melissa

(11:48) Money Ripples is on a mission to help professionals like you get their money working harder. (11:55) Their clients free up an average of $35,000 their first year without having to work extra hours. (12:03) To show you how they’ve put together a powerful training called Cashflow Secrets.

(12:09) And as a listener of the Executive Connect podcast, you can get it completely free. (12:15) Just visit moneyripples.com forward slash secrets and enter the promo code E X E C. (12:24) I love that you said the doctor analogy.

(12:27) Cause I was, as soon as you said that, I was thinking about like my board of directors and it’s right. (12:32) Like even your, your doctors, like one doctor may say, Hey, go have that knee operated. (12:38) And the other one might say, Whoa, that’s, you know, too soon to be doing that.

(12:43) Do some PT first. (12:44) And so advisors are so, so, so important. (12:48) Um, so let’s talk about some common missteps and how to avoid them.

(12:53) I know I personally have paid a lot of dumb tax and making mistakes. (12:58) And so I’m hoping we can save some of the listeners, some dumb tax. (13:02) So what mistakes do you see entrepreneurs making and maybe how can they avoid them?

Matt

(13:10) You know, that’s a big question. (13:13) There’s a lot. (13:14) So in the, in, in my side of my corner of the industry of the financial industry, you know, the 401k world, the defined benefit, the, the misconception that all 401ks, so the 401k is one part of the equation, but the misconception that all 401ks are created equal is so far from the truth, right?

(13:36) They say, Oh, or my CPA or my accountant or my, or, or my tax advisor is telling me to open a 401k plan. (13:43) They’re not referring you to anybody. (13:46) They’re just like, just go open a 401k.

(13:48) And they start Googling 401k and they’re like, okay, this is a 401k or my payroll company does it as a side hustle or something like that, or whatever they’re doing. (13:57) And it’s like, okay, that’s, that seems easy. (13:59) Right.

(14:00) And that is so far from the truth because let’s go back to that retirement plan stack, right? (14:05) The upside down, uh, tiered wedding cake, every layer needs to be designed a very specific way to maximize the layer above it. (14:14) And if it’s not, you’re literally throwing money out the door in either you’re giving your employees too much money, which if you love, if that’s your goal, if that’s your answer to question number one, what’s, why are you here?

(14:27) It’s for my employees. (14:29) That’s great. (14:30) Throw them the money.

(14:31) However, if that’s not, then I’ve seen it to where five digits of contributions are going to your employee pool that you didn’t want them to go to. (14:40) Um, and then not to mention the tax savings on top of that. (14:44) So you could be losing six digits of tax savings and contributions out the door because it wasn’t put together correctly.

(14:53) So that is probably the biggest misconception. (14:55) The biggest thing is just go with the easy button, pick the one that you think is easy for you to do and not make sure that it’s all connected. (15:04) And that should be the specialist.

(15:06) That’s one of the specialists is how does this connect to everything else? (15:09) Because sometimes this, this one doesn’t work. (15:12) We need to go circle back and go to another tax code to help you find something different.

(15:17) And that’s where all the communication comes back to.

Melissa

(15:20) Uh, I have some small business entrepreneur friends that are like, Melissa, I don’t need anybody to help. (15:28) I can do it myself. (15:29) I’ve got chat GPT.

(15:31) That’s going to give me all the answers. (15:32) And so I’m curious your perspective, like finding a trusted partner that understands, you know, these plans, what’s the best way for entrepreneurs to find somebody that makes sense for them?

Matt

(15:47) And that’s, that’s, that’s hard. (15:49) Uh, you know, that’s, that’s kind of hard to find the ones. (15:52) And that’s why I am out here talking to, to you, to you today is to try to get that misconception straightened out.

(16:01) It’s hard to know who is the person you’re because a lot of time you go to your, your, your quarterback, your general practitioners, like who should I work with? (16:10) And they’ll send you to somebody, but they’re not, might not be educated in that side of it. (16:14) So you have to, um, do your due diligence.

(16:18) Don’t click the easy button. (16:20) Um, and, and kind of going back to that part of it, there’s two kinds of 401k plans. (16:26) Um, I should, I should probably say there’s two kinds of 401k documents.

(16:30) It’s called an adoption agreement or a plan document. (16:33) One’s called one’s boilerplate. (16:35) It’s called a prototype.

(16:37) Okay. (16:37) So that’s like you going to legal zoom, downloading your legal document that you need and plugging your name in, in the already made legal document, right? (16:45) Or you go non prototype, which is custom.

(16:48) It’s like you going directly to the attorney instead of legal zoom and building this document exactly for what you need for your family or your business or whatever, two different models. (16:59) One is easy. (17:00) That works for probably a large percentage, but if you have any sort of, um, uh, depth, if you have a lot of, uh, a lot of things going on in your world, a lot of financial things, like a lot of different investments, a lot of different businesses, especially if you’re a multiple, if you’re, if you’re an entrepreneur, uh, multiple businesses is how does that all connect?

(17:23) How does it, how are those, how do those all connect into the same plan? (17:26) And how do we use all the funds, all the income coming in to max fund all these things? (17:31) And how does the calculations work?

(17:33) Um, so who’s, which one’s doing what, which one’s, which one’s doing the boilerplate and which one’s doing the, uh, the custom that’s hard to find. (17:43) Um, generally speaking, if it’s like a bundled approach, like your payroll provider or your, um, or this company is also doing 401ks, generally you’re going to find a boilerplate option. (17:55) So finding that specialist, a third party administrator, that’s our core business model.

(18:02) Um, those are the ones who are hopefully are going to be doing the ones that are the custom models.

Melissa

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(19:26) I find that this has been such a important topic, what we’re talking about today to so many businesses, because like you said, if you’re wasting your money and areas and you’re not picking up on either tax savings or ways you should be doing things, it’s costing you, you know, tens of hundreds of thousands. (19:44) So is there like a full proof way to like solve some of these problems or is it just simply come down to what you were saying, finding the right advisors to educate you?

Matt

(19:55) You know, I think the interviewing, like you said, the doctors, like which one makes sense, but at the same time, so some of the questions you want to, I feel are important, are you want to have someone who’s going to consult with you? (20:09) You want to make sure that are you going to talk to me and give me advice? (20:13) Even for like accountants too, you know, this kind of goes hand in hand or any professional in the, in your financial life is, are you going to consult with me and give me advice throughout the year?

(20:27) Businesses evolve like every year, daily, you know, your business model changes every time you have someone, one of your employees, especially for small businesses, right? (20:38) So if you have like under 50 employees, which is a huge percentage of the population in the business world, if you lose an employee, you just evolved. (20:48) Like now my numbers look different.

(20:50) If you have a key employee gone, like, oh wait, now everything changes and you need to be able to evolve and you need to be able to consult with someone and they need to be able to communicate with your other professionals that you have. (21:02) And if you, if you interview, there’s a lot of third-party administrators, especially in my side of the, in my side of the world. (21:11) A lot of them are order takers.

(21:13) You don’t want to have an order taker, especially the, the more successful you are in order takers, order takers are the ones that are like, I want to do this. (21:21) And they say, okay, they don’t say, well, let me tell you the ins and outs. (21:26) And let me show you from all these different angles.

(21:28) And let’s make sure this makes sense. (21:29) Let’s go talk to this other person in your, in your world. (21:32) So we can make sure it all connects.

(21:34) So consultations are key. (21:35) Being able to consult with someone is very important. (21:38) And then very specifically we don’t charge for amendments.

(21:42) We don’t amend everything. (21:44) That’s one question. (21:45) How much is it every time I need to do an amendment to my plan?

(21:49) If it’s going to be a fee, then you might want to talk to another person because you have to, you’re, like I said, daily businesses evolve. (21:57) You have to be able to mend your plan along with it. (22:02) If things change, some things you can amend mid year, some things you have to amend at the first part of the year, but you have to be able to say, no, this isn’t working.

(22:09) We need to do the calculation this way instead of this way. (22:12) And there’s so many more, there’s so many ways to do calculations inside a plan. (22:16) There’s a lot of gray area, a lot of gray area.

(22:19) And if every time you make a change, there’s a, there’s a fee, then that’s probably not the person you want to get, especially the more complex your situation. (22:29) If you own 15 LLCs or 10 LLCs, it needs, that’s even more complex. (22:35) And that’s more evolution that you have to play with.

(22:38) So those are very important questions, consultation and amendments just in my side of the world.

Melissa

(22:44) I love that. (22:45) I think that’s a really good starting point because I think a lot of times, you know, people build a plan and then they package that plan up, put it on the shelf and forget it until something comes up that makes them want to look at it. (22:58) But finding like an advisor that’s agile and that can change with you as you buy companies or sell companies or grow bigger or look for other tax savings is really key.

(23:10) So I love that you brought that up. (23:11) That’s a really good. (23:13) So for, I guess for kind of clarity for business owners that are ready to take the next step and their retirement plan, seriously, what should they do next?

Matt

(23:25) Yeah. (23:26) Have conversations, have conversations with people. (23:30) We have an easy website to go to.

(23:32) It’s 401k.expert. Okay. (23:34) That’s the website, 401k.expert. It takes you right to our landing page and it’s to connect with one of our experts. (23:41) There’s some case studies and things on there too, but having conversations in advance, not when the deadlines are here.

(23:50) You know, for example, there is, if you file an extension, let’s say for 2024, you have up until the day you file, including those extensions. (24:00) So September 15th, for the most part, if you’re an S corporation, things like that, you have up until that date to implement and contribute and deduct for 2024. (24:10) As long as you file an extension, you’re fine.

(24:12) So don’t wait till September 10th to say, hey, I should probably do this. (24:19) It’s let’s talk. (24:20) I talked to business owners for two years, sometimes three years before they actually like, yeah, I want to do this.

(24:26) I want to add this plan to my stack, but I’m not ready for it yet. (24:31) And that’s totally fine. (24:32) I need to hit this level of profit before it makes any sense.

(24:36) You know, I want to get to 500,000 before I start adding a defined benefit plan. (24:40) Great. (24:40) That’s fine.

(24:41) And you add those layers as, but it’s all connects. (24:44) It all connects. (24:45) And having those conversations and knowing when those deadlines are, knowing what’s available and then putting it to the side, that’s absolutely fine.

(24:54) So just having a conversation and go to 401k.expert and we can have those conversations.

Melissa

(24:59) I love it. (25:01) Any final thoughts that you want to leave with our listeners that we haven’t touched on today, Matt?

Matt

(25:09) Just, I think a lot of, just to reiterate kind of what we talked about already is this is one, part of the tax code is one. (25:18) It all connects. (25:20) Everything connects.

(25:21) All your other strategies connect and making sure it all connects is very, very important.

Melissa

(25:27) I love it. (25:28) Great advice. (25:29) Now, where can our listeners best connect with you, Matt?

Matt

(25:34) Yeah, 401k.expert. That’s the best place to find us, 401k.expert. And you can find us on LinkedIn. (25:41) It’s Life, Inc. (25:42) Retirement Services is our company.

Melissa

(25:45) Thanks again for joining us today, 

Matt 

(25:48) Retirement might feel like a distant dream, but with the right plan, you can actually hit your goals and still enjoy the ride getting there. 

Melissa

(25:56) That’s the Executive Connect Podcast.