BY PHIL SHETSEN
If you own a private chauffeur or transportation company, year-end tax planning isn’t just about compliance, it’s about keeping more of what you’ve earned and turning today’s profits into tomorrow’s wealth. For many owners, especially those running fleets of 15 to 100 vehicles, the question is simple: How do I reduce this year’s tax bill while building financial security for myself and my family?
Depreciation has long been the go-to answer. But relying on vehicle write-offs alone has limits. Cars age, deductions shrink, and eventually the shelter runs out. Retirement plans, on the other hand, can create tax deductions that rival (and often exceed) depreciation, while also building an asset you can count on for retirement. Here’s how 401(k) plans, profit sharing, and cash balance pensions can work as powerful tax and retirement tools for owners who want both immediate savings and long-term security.
BEYOND DEPRECIATION: Why Retirement Plans Belong in the Mix
Depreciation is a short-term fix. Retirement plans extend the tax benefit year after year. And unlike vehicles, they grow into something you can use later in life.
Two big advantages stand out:
❱ Immediate tax deduction: Contributions reduce taxable income in the year they’re made.
❱ Future wealth accumulation: Unlike depreciation, which only offsets taxes, retirement plans build an account designed to grow tax-deferred.
When layered on top of depreciation, these plans create a stronger, more consistent tax strategy.
The Options at a Glance
↹ 401(k) Plans
These let employees (and you) defer income into retirement savings. For 2025, the contribution limit is $23,000, plus a $7,500 catch-up if you’re 50 or older. The company can match contributions, turning the plan into both a recruiting tool and a tax shelter.
↹ Profit Sharing Plans
Often paired with 401(k)s, these plans allow the company to make discretionary contributions up to 25% of eligible payroll. The flexibility means you can adjust contributions based on how profitable the year is.
↹ Cash Balance Pension Plans
For owners over 45, these plans can be game-changers. Contributions often range from $100,000 to $300,000+ annually, creating massive deductions and a way to catch up on retirement savings if you’ve been focused on reinvesting in your fleet. Because the IRS allows higher contributions as you age, these plans are especially valuable for owners in their late 40s, 50s, and 60s.
The Age Advantage
If you’re in midlife or later, the IRS rules tilt in your favor:
❱ Bigger deductions: Older owners can contribute far more each year.
❱ Faster accumulation: Even if you’ve delayed saving, you can build a meaningful nest egg in a shorter time.
❱ Catch-up potential: Cash balance plans are designed for owners who’ve spent years prioritizing business growth over retirement savings.
Unlike vehicles, which lose value every year, retirement plans preserve and grow wealth.
Timing and Flexibility
Owners often hesitate, thinking retirement plans lock them into high annual contributions. But many designs include flexibility:
❱ New plans can exclude participation in year one, giving you breathing room.
❱ 401(k) and profit-sharing contributions can be discretionary.
❱ Even cash balance plans, while more structured, can be adjusted as profits and goals change.
What It Takes to Evaluate the Right Plan
A proper analysis should consider:
❱ Census data: Employee ages and years of service
❱ Compensation: Salaries and bonuses
❱ Hire dates: To determine eligibility and vesting
With this data, an advisor can model different scenarios and show exactly how each plan benefits both you and your staff.
Benefits Beyond Taxes
The right plan does more than cut your tax bill:
❱ Employee retention: Strong retirement benefits attract and keep drivers, dispatchers, and staff.
❱ Succession flexibility: Personal wealth outside the business makes selling, merging, or passing the company to family less stressful.
❱ Financial security: Retirement savings provide stability long after vehicles have depreciated.
Why Partnering with the Right Advisor Matters
Retirement plans involve complex IRS rules and administration. You’ll want an advisor who:
❱ Works with your CPA to maximize deductions
❱ Designs a plan around your workforce and goals
❱ Ensures compliance and smooth administration
❱ Educates your employees so they value the benefit
Conclusion: Don’t Let Another Tax Year Slip Away
Year-end is the moment to look beyond depreciation. Retirement plans can deliver equal or greater deductions—and unlike vehicle write-offs, they grow into a financial foundation you can rely on when you need it the most.
Review your employee census and compensation data, run the numbers with an advisor, and evaluate which plan—401(k), profit sharing, or cash balance—fits your company best.
Don’t let another year go by without turning today’s tax planning into tomorrow’s financial security. Your future self, and your family, will thank you. [CD1125]
Phil Shetsen is the president of Bona Vita Benefits. He can be reached at
