Retirement Plan Design & Administration
Business Owners:
Business owners interested in sponsoring a plan can work with one of our retirement plan design consultants to design a plan specific to their needs. Types of plans installed include, 401K’s, Profit Sharing Plans, SEP IRA’s, Simple IRA’s, Deferred Compensation, and Defined Benefit Plans. Plan design is critical to the success of your plan within your company and your employees.
Participants:
We work with individual participants of retirement plans in a group setting or individual one on one counseling working on the following areas:
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Asset Allocation- Based on your risk tolerance, we recommend options for an asset allocation model to fit your needs. Classes of investments include: Large stock, Small stock, International stock, Bonds and Money Markets. -
Income Analysis- Calculating one's future retirement income needs, based on inflation, projected interest rates and life expectancy. The goal is to calculate current monthly savings needed to provide the income you desire at retirement. -
Tax Efficiency- Developing efficient tax strategies. Since there are a variety of plans, which plan is right for you? Some of these plans include 401k, SEP IRA, Simple IRA, IRA, Pension and Profit Sharing Plans. -
Investments - Which investments are right for you? We analyze mutual funds, stocks, bonds, limited partnerships, and real estate to find which are the most appropriate investment for your risk tolerance.
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2012 Qualified Plan Limits |
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Other Plan Limits* |
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401(k) Deferral: |
$ 17,000 |
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SIMPLE 401(k) IRA Limit: |
$ 11,500 |
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401(k) Catch Up: |
$ 5,500 |
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SIMPLE 401(k) IRA Catch Up: |
$ 2,500 |
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Compensation Limit: |
$ 250,000 |
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IRA/ROTH IRA Contribution: |
$ 5,000 |
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Individual Limit: |
$ 50,000 |
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IRA/ROTH IRA Catch Up: |
$ 1,000 |
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Defined Benefit Plan: |
$ 195,000 |
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SEP Contribution Limit: |
$ 50,000 |
401(k):
Section 401(k) is the IRS code that allows eligible participants in a Defined Contribution plan to make voluntary tax deferred contributions. These contributions remain in a Trust and are invested by the participant. The participants are not taxed on the income they defer nor are they taxed on the growth of their investments. Taxes are paid when the money is withdrawn after age 59 1/2.
Safe Harbor Plan:A Safe Harbor plan is one that requires the employer to make a 100% vested contribution to his or her employees in the form of a 4% match or a 3% non-elective contribution. A Safe Harbor plan can avoid non-discrimination testing. Safe Harbor plans allow business owners to participate in their company retirement plan regardless of employee participation.
Profit Sharing:This is an employer contribution made to his or her employees. Profit Sharing contributions are given to all eligible employees. Profit Sharing can be allocated in different ways depending on the demographics of the group and is typically vested up to 6 years. Here are some allocation formulas used in most profit sharing plans:
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Pro Rata: every eligible employee receives an equal % of their pay -
Integrated: an eligible employee earning more than the social security wage base ($97,500) will receive a larger % of pay contribution -
Age Weighted: after a minimum contribution requirement is met, the older employees will receive a larger % of pay contribution -
New Comparability: classes of employees can be segregated into groups (owners, officers, managers, rank and file), age disparity between the groups allow for tiered levels of benefit. This formula will not work if the top tier is younger than the bottom tier
Defined Benefit Plans:
A Defined Benefit Pension Plan (DB) is a Qualified Plan where contributions to the plan are based on a participant's age and compensation. This plan works best for business owners age 44 and older with few or no employees. The contribution limit in a Defined Benefit plan can be upwards of 100% of pay. These plans cost more to administer and contributions to employees may be higher then most Defined Contribution plans, however the level of contribution to the business owner can be so great, leading to large tax deductions, in most cases it's worth it.
Retirement Plan Comparisons
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