hicks pension services presented by presented by eric petersen eric petersen pension consultant...
TRANSCRIPT
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Hicks Pension ServicesHicks Pension Services
• Presented byPresented by
•Eric PetersenEric Petersen
• Pension ConsultantPension Consultant
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Who can have a planWho can have a plan
• Any business entityAny business entity– Non ProfitNon Profit– C-CorpC-Corp– S-CorpS-Corp– Sole PropSole Prop– LLCLLC– PartnershipPartnership
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Types of PlansTypes of Plans
Defined Contribution Defined BenefitDefined Contribution Defined Benefit ERISA 403 (b) Defined BenefitERISA 403 (b) Defined Benefit
Non-ERISA 403 (b) Cash Balance Non-ERISA 403 (b) Cash Balance PlanPlan
401-k Profit Sharing Plan401-k Profit Sharing Plan
Old plans Old plans
KeoughKeough
Money Purchase PlanMoney Purchase Plan
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Types of PlansTypes of Plans
• SEPSEP
• SIMPLESIMPLE
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Sponsor
TRUST
•Tax Deferred
•Safe from Creditors
•Self-Directed Investments
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40% Tax Rate
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EmployeeEmployer Sponsor
TRUST
•Tax Deferred
•Safe from Creditors
•Self-Directed Investments
17,500 or
23,000
H.C. N.H.C. 10 10 5 5 0 0
+ 2 %
9 ½ %
Eligibility Requirements
•Age 21•Full-Time•One Year
•Classification•Last Day
Allocate
=%
AgeAge & %
5 %7½
7%
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SEP:
Percentage of Pay
Name Age Compensation Allocation Owner 50 $ 120,000 $ 30,000 Owner 55 120,000 30,000 Employee 25 50,000 12,500 Employee 35 50,000 12,500 Employee 45 50,000 12,500 Employee 35 50,000 12,500 TOTALS $ 440,000 $ 110,000 TOTAL FOR OWNERS 60,000 TOTAL FOR EMPLOYEES 50,000
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Profit Sharing Plan Allocation Method:
Integrated with Social Security
Name Age Compensation Allocation Owner 50 $ 120,000 $ 30,000 Owner 55 120,000 30,000 Employee 25 50,000 10,000 Employee 35 50,000 10,000 Employee 45 50,000 10,000 Employee 35 50,000 10,000 TOTALS $ 440,000 $ 100,000 TOTAL FOR OWNERS 60,000 TOTAL FOR EMPLOYEES 40,000 Savings vs. SE: $ 10,000
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Profit Sharing Plan Allocation Method:
Tiered or Cross Tested
Name Age Compensation Allocation Owner 50 $ 120,000 $ 30,000 Owner 55 120,000 30,000 Employee 25 50,000 2,500 Employee 35 50,000 2,500 Employee 45 50,000 2,500 Employee 35 50,000 2,500 TOTALS $ 440,000 $ 70,000 TOTAL FOR OWNERS 60,000 TOTAL FOR EMPLOYEES 10,000 Savings vs. Percentage of pay method: $ 40,000
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Profit Sharing Plan Allocation Method:
Tiered or Cross-Tested with 401-k
Name Age Compensation Allocation Owner 50 $ 120,000 $ 30,000 + 22,000 401k Owner 55 120,000 30,000 + 22,000 401k
Employee 25 50,000 2,500 Employee 35 50,000 2,500 Employee 45 50,000 2,500 Employee 35 50,000 2,500 TOTALS $ 440,000 $ 114,000 TOTAL FOR OWNERS 104,000 TOTAL FOR EMPLOYEES 10,000 Savings vs. SEP : $ 40,000
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Defined Benefit / Cash Balance :
Percentage of Pay
Name Age Compensation Allocation Owner 50 $ 120,000 $ 150,000 Owner 55 120,000 150,000 Employee 25 50,000 12,500 Employee 35 50,000 12,500 Employee 45 50,000 12,500 Employee 35 50,000 12,500 TOTALS $ 440,000 $ 350,000 TOTAL FOR OWNERS 300,000 TOTAL FOR EMPLOYEES 50,000
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PAYROLL INFORMATION
Date of Date of Annual
Name Key Sex Birth Employment Compensation1
2
3
4
5
6
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VestingVesting
• 6 years 100 %6 years 100 %
• 5 years5 years 80 80
• 4 years4 years 60 60
• 3 years3 years 40 40
• 2 years2 years 20 20
• 1 year1 year 0 0
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Safe HarborSafe Harbor
• 3% Profit Sharing Contribution to all 3% Profit Sharing Contribution to all Eligible participantsEligible participants
• Dollar for dollar match on the first Dollar for dollar match on the first 3% of pay. 50 cents on the dollar 3% of pay. 50 cents on the dollar for the next 2% of payfor the next 2% of pay
• Both methods will satisfy Top Heavy Both methods will satisfy Top Heavy requirements.requirements.
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Reactive vs. Reactive vs. ProactiveProactive
Estate PlanningEntity Formation
Buy Sell Agreements
Accounting SystemPayroll
Retirement Planning
Client calls you on April 15th
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How we work togetherHow we work togetherInsert Assumptions
Contribution: Annual Amount 16,500Interest Rate: Portfolio Average Return 0.08Numbers of year to retirement 13
Current Retirement Savings 300,000
Total from Qualified Plan $354,672.39
Total Retirement Savings $1,170,559.51
Monthly Income $9,275.00 *
Annual Income $111,300.00 *
* Assumes annuity purchase
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Questions to ask clientsQuestions to ask clients
• Have you been filing IRS form 5500?Have you been filing IRS form 5500?– Voluntary Delinquent Filer programVoluntary Delinquent Filer program
• Has your plan document been Has your plan document been restated?restated?– All plans must restateAll plans must restate
• Does plan require an annual Audit?Does plan require an annual Audit?– Look up clients on FreeErisa.comLook up clients on FreeErisa.com
• Top Heavy ContributionsTop Heavy Contributions