Qualified Plan Includes PRIME - Pre-tax Healthcare Retirement Funding

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FINEX Wealth Management, Inc. is an independent, national, fee based third party administrator providing consulting, design and administrative services to plan sponsors and their advisors across the United States. This unique plan consists of five (5) contribution components: 401(k), Profit Sharing, Cash Balance Defined Benefit, Aggregated “PRIME” Benefit, and Tax Reserve. The key to this design is combining plan attributes in a non-discriminatory manner, cross-testing, and satisfying the concurrent offset rules which allow business owner’s to create a targeted employees only plan.

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  • FWM Combined Qualified Plans address all DOL mandates for increased responsibility and accountability from plan sponsors and include: 1. New risk management strategies 2, More analysis and due diligence 3. Documented processes and procedures in place to keep their plan compliant 4. Enhanced participant communication 5. Fiduciary Handbook & Toolkit for retirement plan trustees 6. Understanding ERISA & Fiduciary Responsibility 7 Online IPS Manager & Annual Review 8. Fiduciary Standards Warranty 9. Fund Check® 10. Trustee Annual Plan Review 11. Customized Audit Package 12. Participant Investment Education 13. Participant Goal Setting & Personalized Reviews
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  • WHO SHOULD CONSIDER THE COMBINED QUALIFIED PLAN DESIGN WITH PRIME- POST RETIREMENT INDIVIDUAL MEDICAL EXPENSE ACCOUNT 1. Owners/professionals seeking a higher contribution/tax deduction than the traditional 401k profit sharing . 2. Highly profitable companies of all types and sizes. 3. Successful family businesses and closely-held businesses. 4. CPA and law firms, medical groups and professional firms. 5. Older owners who need to squeeze 20 years of retirement saving into 5 to 10 years. 6. Owners/partners looking for a way to fund a buy-sell or stock redemption agreement on a tax deductible basis. 7. Wealthy owners and professionals with charitable giving intentions stymied by the limitations on tax deductibility. 8.Pre-tax planning for medical expense needs in post retirement
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  • FWM Combined Qualified Plan provides advanced planning inside pension: 1. Fund business buy/sell agreements, ESOPs, Captives 2. Fund charitable planning 3. Fund Long-term Care, single pay, post retirement 4. Fund estate equalization plan 5. Fund DB corpus in fixed and indexed annuities 6. Fund healthcare/medical expense account 7. Fund tax reserve to pay tax on RMD distributions 8. Fund to reduce quarterly tax estimates 9. Fund to reduce payroll tax, FICA, AGI 10. Fund to increase savings up to 8x the max pension limit.
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Qualified Plan Includes PRIME - Pre-tax Healthcare Retirement Funding

  1. 1. COMBINED QUALIFIED PENSION PLAN CONCURRENT OFFSET, AGGREGATED BENEFITS & POST RETIREMENT MEDICAL BENEFITS UNDER IRC §401(H) FINEX WEALTH MANAGEMENT, INC. BARRY M. FINE SENIOR FINANCIAL ADVISOR FINEX WEALTH MANAGEMENT, INC. 1201 Broadway, Suite 803 New York, NY 10001 631.513.8822 An Independent Advanced Financial Strategies, Inc. Group Affiliate *****An Independent Tegrit Group Affiliate
  2. 2. Tax Planning Tipso If needed, double the otherwise maximum tax deduction for 2013o Excess loss carry back or carry forward.o IRC § 404(a)(6) allows a cash basis tax payer to set-up Combined Plans and/or add-on plan, now in 2013, and double the otherwise maximum contribution/tax deduction, as long as, the plan is funded on a timely basis. COMBINED QUALIFIED PLANS
  3. 3. THE PURPOSE OF THIS PRESENTATIONo TO FAMILIARIZE YOU WITH COMBINED PLANS AS AUTHORIZED BY THE PENSION PROTECTION ACT (PPA) OF 2006o TO ASSIST YOU IN PLACING CLIENT ASSETS UNDER YOUR MANAGEMENT.o TO GROW AND PROTECT CLIENT ASSETSo THE MAXIMUM TAX DEDUCTIBLE CONTRIBUTIONS ALLOWABLE FOR OWNERS WITH THE LOWEST POSSIBLE PLAN COST(S)o ALL OF THE CREDITOR PROTECTIONS AFFORDED QUALIFIED PLANS UNDER FEDERAL LAW AND STATE LAWS i.e. 2005 BAPCPA* *Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 TO GIVE YOU A COMPETITIVE ADVANTAGE
  4. 4. THE “GOLDEN RULES” OF PLAN DESIGN THERE ARE 3 MAIN “GOLDEN RULES”  MEETS THE CLIENT’S OBJECTIVES  MAKE SURE THE PLAN IS COST EFFECTIVE  MAKE IT EASY TO UNDERSTANDWHAT IS THE BEST STARTING POINT FOR A PLAN DESIGN?MAXIMIZE OWNER BENEFITS - MINIMIZE PLAN COSTS
  5. 5. THE COMBINED QUALIFED PLAN FIVE CONTRIBUTION COMPONENTS1. The 401(k) Plan2. The Profit Sharing Plan  25% of eligible compensation ($255,000 in 2013)  6% of eligible compensation (service entities <25 participants)3. The Pension Plan  IRC § 412(e)(3), Traditional or Cash Balance4. The Aggregated Benefit IRC §401(h)/Life Ins. ALL CAN BE FUNDED 100%
  6. 6. 2013 Estimated Maximum Contributions*Age 401k only 401k P/S Combined Qualified Plan60-65 $23,000 $56,500 $300,000 - $450,00055-59 $23,000 $56,500 $250,000 - $325,00050-54 $23,000 $56,500 $200,000 - $275,00045-49 $17,500 $51,000 $150,000 - $225,00040-44 $17,500 $51,000 $125,000 - $200,000* Inclusive of spousal benefits where applicable ALL CAN BE FUNDED 100%
  7. 7. CROSS TESTING, CONCURRENT OFFSETS & AGGREGATED INCIDENTAL BENEFITS Keys to Max Contributions & Min Plan Costs The Key to the Combination Plan Designs is doing it in a non- discriminatory manner while satisfying IRC Sec 401(a)(26). Cross Testing one plan with another establishes that the benefits at retirement from both plans are essentially “equal in value” at the plan’s NRD. Satisfying the Concurrent Offset Rules* allows us to create a “targeted employees only plan”. We can count participants for testing who are fully offset on a non-discriminatory basis.** Aggregated Incidental Benefits allow us to increase the maximum pension contribution up to 133% of the otherwise maximum contribution. The AIB is a $$$ benefit that can be individually allocated as a 401h benefit, a life insurance benefit or a combination of the two at the discretion of the participant. * §1.401(a)(26)-5(a)(2); 401(a)(26) = Minimum Participation Requirements ** the 40%/50 employee rule in 401(a)(26)
  8. 8. CASH BALANCE PLAN FUNDAMENTALSo It looks like an old fashioned savings accounto Accounts are credited with: o Employer Annual Contribution Credit e.g. $1,000 o Annual Interest Credit e.g. 5% = $50o The Retirement Value is a Lump Sum, the Cash Balance!o For Example, $1,000/ Year @ 5% over 40 years = $126,190o Benefits are more easily understood by the participant o Participant receives an annual statement that shows an account balanceo Costs are Understandable by the Plan Sponsor * §1.401(a)(26)-5(a)(2); 401(a)(26) = Minimum Participation Requirements ** the 40%/50 employee rule in 401(a)(26)
  9. 9. WHAT IS IRC §401h “PRIME” or LIFE INSURANCE Aggregated Benefit ?• THE POST RETIREMENT INDIVIDUAL MEDICAL EXPENSE BENEFIT• PRIME BENEFITS ARE AUTHORIZED UNDER IRC §401(h)  A 401(h) account is a separate fund, or account, of a pension plan to be used exclusively for retiree health benefits.  401(h) benefits are tax deductible subject to Final Regs Sec.404(a)(3)(f)(2); fully tax deferred and payouts are tax free under IRC Sec. 105 or 106.  401(h) tax deductible contributions, as allocated, are subject to the annual addition limit for Key Employees and HCEs ($50,000 in 2013)  401(h) benefits vest at the NRD for employees who go on pay status; employee/participants leaving prior to NRD forfeit 100% of their benefitIRC § 401(h) FUNDS NOT USED FOR BENEFITS REVERT TO THE COMPANY
  10. 10. Annual Compliance Testing and Government Reporting  Monitoring of Qualification requirements (§401).  Contribution deductibility calculations (§404).  Minimum Participation and Coverage testing (§410)  Monitoring of Minimum Vesting Standards (§411).  Monitor compliance with Definitions and Special Rules (§414)  Annual addition of benefits and allocations testing (§415).  Top heavy testing (§416).  ADP/ACP testing (applicable to 401(k) plans).  Preparation of DOL/IRS Form 5500 and related schedules.  Preparation of Summary Annual Report for participants.  Preparation of appropriate PBGC form (for defined benefit plans only). The GATEWAY CONTRIBUTION @ 7.5% DOES TRIPLE DUTY, it covers the:  Profit Sharing Safe Harbor  Top Heavy Safe Harbor  The Gateway @ 7.5%Concurrent Offset Method & Aggregated Benefits Utilized in Proformas
  11. 11. Case Study Participant Information Proposed AllocationsName Age Salary 401(k) Deferrals Matching Allocation Profit Sharing Allocation Cash Balance Allocation Aggregated Benefit Total Allocations Employer % of Pay Life Insurance Face Amount 49 $250,000 $17,000 $5,775 $27,225 $130,800 $42,500 $223,300 89.32% $1,666,667 45 $200,000 $17,000 $5,775 $27,225 $107,700 $15,000 $172,700 86.35% $1,666,667Owner Totals: $450,000 $34,000 $11,550 $54,450 $238,500 $57,500 $396,000 72.34% $3,333,333 59 $242,923 $22,500 $7,700 $12,146 $25,000 $7,500 $52,346 21.55% $109,777 50 $230,791 $13,000 $4,550 $11,540 $0 $7,500 $23,590 10.22% $70,762 66 $166,891 $22,500 $7,700 $13,345 $0 $7,500 $28,545 17.10% $0Executive Totals: $640,605 $58,000 $19,950 $37,030 $25,000 $22,500 $104,480 19.08% $180,539 42 $63,011 $0 $0 $3,151 $0 $1,050 $4,201 6.67% $0 59 $65,526 $7,800 $2,730 $3,277 $0 $700 $6,707 10.24% $0 25 $29,483 $0 $0 $2,250 $0 $750 $3,000 10.18% $71,816 52 $67,804 $3,900 $1,365 $3,391 $0 $700 $5,456 8.05% $0 32 $35,035 $0 $0 $2,250 $0 $950 $3,200 9.13% $58,665 62 $109,629 $10,250 $3,588 $5,483 $0 $700 $9,770 8.91% $0 45 $54,043 $0 $0 $2,703 $0 $1,200 $3,903 7.22% $0 54 $71,892 $7,800 $2,730 $3,595 $0 $700 $7,025 9.77% $0 53 $60,000 $0 $0 $3,001 $0 $700 $3,701 6.17% $0Staff Totals: $556,424 $29,750 $10,413 $29,100 $0 $7,450 $46,963 8.58% $130,481Grand Totals: $1,647,029 $121,750 $41,913 $120,581 $263,500 $87,450 $547,443 100.00% $3,644,353* Total Allocations for Staff only inlcudes Employer Allocations (does not include 401(k) Deferrals)2012 Retirement Analysis 10.31.12 PYE Age Salary 401(k) Deferrals** Matching Allocation Profit Sharing Allocation Cash Balance Allocation Aggregated Benefit* Total Allocations 49 $250,000 $17,000 $5,775 $27,225 $130,800 $42,500 $223,300 45 $200,000 $17,000 $5,775 $27,225 $107,700 $15,000 $172,700Owner Totals: $450,000 $34,000 $11,550 $54,450 $238,500 $57,500 $396,000Double-up** $0 $11,550 $54,450 $238,500 $57,500 $362,000Double- up Totals: $34,000 $23,100 $108,900 $477,000 $115,000 $758,000 71.45%Executive Double-up Totals $0 $39,900 $74,060 $50,000 $45,000 $208,960 19.70%Staff Double-up Totals: $0 $20,826 $58,200 $0 $14,900 $93,926 8.85% $34,000 deductible on calendar year basis *Policy date 9.1.12
  12. 12. WHO SHOULD CONSIDER Immediate 2013 Tax Benefits A COMBINED QUALIFIED PLAN DESIGN  Owners/professionals seeking a higher contribution/tax deduction than the traditional 401k profit sharing maximum of $50,000 ($55,500 with Catch-up).  Highly profitable companies of all types and sizes.  Successful family businesses and closely-held businesses.  CPA and law firms, medical groups and professional firms.  Older owners who need to squeeze 20 years of retirement saving into 5 to 10 years.  Owners/partners looking for a way to fund a buy-sell or stock redemption agreement on a tax deductible basis.  Wealthy owners and professionals with charitable giving intentions stymied by the limitations on tax deductibility. 2012 Deductions Still Available Through Tax File Extensions Only
  13. 13. ABOUT FINEX WEALTH MANAGEMENT, INC.o FWM is an independent, national, fee based third party administrator providing consulting, design and administrative services to plan sponsors and their advisors across the United States.o FWM partners with RIA’s, Agencies, Independent Advisors and sells any form of investment or insurance product and renders investment advice.o FWM members have over 40 years of experience in financial services, plan benefits and administrative services.o FWM plan designs are actuarially certified and come with IRS favorable letter of determination.o FWM provides comprehensive legal documentation, trust accounting, recordkeeping, benefit statements, plan reporting and governmental filings.o FWM is an independent Tegrit Group affiliate; Tegrit has been awarded the CEFEX certification for adhering to the American Society of Pension Professionals & Actuaries (ASPPA) Standard of Practice. 2012 Deductions Still Available Through Tax File Extensions Only
  14. 14. BARRY M. FINE SENIOR FINANCIAL ADVISOR FINEX WEALTH MANAGEMENT, INC. 1201 Broadway, Suite 803 New York, NY 10001 631.513.8822An Independent Advanced Financial Strategies, Inc. Group Affiliate ***** PLAN DESIGN AND PROPOSALS AVAILABLE UPON RECEIPT OF CENSUS

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