Frequently Asked Questions
How do I set up a 401(k) for my business?
Most owners can have a plan running in a few weeks. You choose a plan type, pick a recordkeeper and custodian, decide on the match and the eligibility rules, and sign the plan document. If you have employees, the plan has to pass annual testing, and a safe harbor design avoids most of that. The paperwork is the part people put off for a year, so I handle the setup and coordinate the administration rather than sending it back to your desk.
What is key person insurance, and how do I get it in place?
Key person coverage is life insurance on someone critical to the business. The business owns the policy, pays the premium, and is the beneficiary. The money can offset the losses that follow losing that person, or fund what it takes to hire a replacement. Putting it in place takes an application and two kinds of underwriting: health and financial. The financial side is where the carrier confirms the amount is justified by what that person is actually worth to the company.
How do I know if my buy-sell agreement is actually funded?
Look for two things. First, does the agreement say how the purchase price gets paid. Second, does a policy or another funding source actually exist for that amount. A buy-sell can sit signed and unfunded for years without anyone noticing, because nothing forces the question until it is needed. It is also worth checking whether the valuation method in the document has been updated recently. Your attorney holds the agreement. I can help you find out whether the money behind it is real.
What should I do with the money after I sell my business?
There is no single answer, and anyone who gives you one before seeing your numbers is guessing. The order that tends to matter: understand the actual after-tax figure rather than the headline price, set aside what you need for the next two or three years so you are never forced to sell something at a bad moment, then decide what the rest is for. The first ninety days are mostly about not making permanent decisions under pressure.
How early should I start planning to sell my business?
Earlier than most people do. Two to three years gives you time to clean up the financials, reduce how much the business depends on you personally, and think about the structure of the sale rather than just the price. Twelve months is still workable. Thirty days before closing, most of the planning options have closed with it, and you are processing a transaction rather than shaping one.
What should I do with my RSUs when they vest?
Start with the tax, because it is already happening. Vested RSUs are taxed as ordinary income at vesting whether you sell them or not, and most employers withhold shares to cover part of it. Whether that withholding matches your actual tax rate is worth checking, because a shortfall shows up in April. After that it becomes a concentration question rather than a tax question, and the two need different answers.
How much of my net worth should be in my company's stock?
There is no universal number, and an advisor quoting one without knowing your situation is guessing. The question that matters more is what happens if the stock falls sharply at the same time your job is at risk, because for an employee those two events are related rather than independent. That is the real shape of concentration risk: your income and your savings depend on the same company having a good year.
What is a 10b5-1 plan?
It is a written trading plan an insider adopts in advance that allows shares to be sold on a set schedule, including during periods when trading would otherwise be restricted. Because the plan is put in place before you hold any material nonpublic information, it provides an affirmative defense against insider trading claims. Current rules require a cooling-off period between adopting the plan and the first trade. Your company's legal team administers it, not your advisor.
What should I do with an old 401(k) from a former employer?
You generally have four options: leave it where it is, roll it into your new employer's plan, roll it into an IRA, or cash it out. Cashing out triggers income tax and usually a penalty if you are under 59 and a half. One thing worth checking first: if the account holds appreciated stock in your former employer, there is a separate tax treatment called net unrealized appreciation that can matter a great deal and disappears if the money is moved the wrong way.
What does it cost to work with you?
One percent a year on the money I manage for you. It comes out of the account, so there is no bill to pay. Some planning work is hourly instead. Everyone pays 1% right now. Sometimes less. My agreement allows up to 2%, but that is a ceiling, not the price. Insurance is different. When I place a life policy or an annuity, the insurance company pays me a commission. You should know that before we talk about any product.
Do I need a certain amount of money to work with you?
As a general rule, about $250,000 in investable assets or $250,000 in annual income. Either one works on its own. The income route matters because plenty of people earning well have not accumulated much yet, and that is a planning problem worth getting ahead of rather than a reason to wait. If neither is true yet, I will tell you and point you somewhere useful instead.
Who is Nick Jackson?
Nick Jackson is the founder of Collective Wealth, LLC, a registered investment adviser based in Tulsa, Oklahoma. He has been licensed in financial services since 2006 and worked at Northwestern Mutual, MML Investors Services, and Adaptation Financial before founding Collective Wealth in 2022. He works with business owners and executives on retirement plans, investments, key person coverage, and buy-sell funding.
Where is Collective Wealth located and who can you work with?
Collective Wealth is based in Tulsa, Oklahoma, and is registered as an investment adviser in Oklahoma and Texas. Working with clients in other states is often possible depending on that state's rules, and registration can be added when it makes sense. Meetings happen by video as often as in person, so distance is rarely the deciding factor.
Still have a question? Call 918-927-4241 or email nick@mycollectivewealth.com.