Welcome to today’s presentation on retirement plans for small businesses. My name is _____________ and I am a Financial Advisor with UBS Financial Services Inc. Before we begin, I would like to tell you a little about myself. (Note to FA: Give personal background information here.) Over the next ____ I will share with you some important information that will help you make a number of significant decisions regarding your future and the future of your employees. Today’s seminar will focus on the importance of planning for retirement, and how a retirement plan can help you achieve the goals you have for your business.
Small Business Retirement Plans Exploring Your Options
It is important that you understand the ways in which we conduct business and the applicable laws and regulations that govern us. As a firm providing wealth management services to clients in the U.S., we are registered with the U.S. Securities and Exchange Commission (SEC) as an investment adviser and a broker-dealer, offering both investment advisory and brokerage services. Though there are similarities among these services, the investment advisory programs and brokerage accounts we offer are separate and distinct, differ in material ways and are governed by different laws and separate contracts.
It is important that you carefully read the agreements and disclosures that we provide to you about the products or services we offer. While we strive to ensure the nature of our services is clear in the materials we publish, if at any time you seek clarification on the nature of your accounts or the services you receive, please speak with your Financial Advisor.
For more information, please visit our website at www.ubs.com/workingwithus
O V E R V I E W 1 The Need for Retirement Planning 2 Establishing a Retirement Plan 3 Types of Retirement Plans
$162 billion in retirement assets, of which $63.1 billion is corporate retirement plan assets 1
Over 410 offices nationwide 2
Network of 8,017 Financial Advisors 2
A comprehensive spectrum of products and services designed with clients' needs in mind
Access to the capabilities of a global financial services firm and experienced Financial Advisors
1 As of December 31, 2008 2 As of September 30, 2008 UBS Financial Services Inc. is a subsidiary of UBS AG, a leading global financial services firm. Among the strengths of UBS Financial Services Inc. are the following:
The Need for Retirement Planning 1 Will you be ready?
Individuals age 65+ with annual income of $50,000 or more
Source: Employee Benefit Research Institute (EBRI) estimates of the March 2008 Current Population Survey
People are Spending More Time in Retirement Men Women Source: Health, United States, 2007 CDC National Center for Health Statistics Life Expectancy After Age 65 12.8 13.1 15.1 17.1 15.0 17.0 18.9 20.0 1950 1970 1990 2004
1 As of May 12, 2008 2 TV Guide, January 2008 3 U.S. Bureau of Labor Statistics, April 2008 4 National Automobile Dealers Association, May 2008 5 U.S. Census Bureau, September 2008 6 Trends in College Pricing 2008 , The College Board’s Annual Survey of Colleges , 2008-2009 Item 1980 Current First-Class Stamp $0.15 $0.42 1 TV Guide $0.40 $2.99 2 Loaf of Bread $0.52 $1.37 3 Average New Car $7,571 $28,797 4 Average New Home $64,600 $275,500 5 College Education $4,806 $14,333 6 (4-year public annual tuition and room and board)
What are the benefits? Establishing a Retirement Plan 2
Required employer contributions, using one of two methods:
3% Nonelective contribution, or
Matching contribution: 100% of first 3% of compensation and 50% of next 2% of compensation
Safe harbor contributions must be 100% vested
Generally, plan must be adopted/amended by October 1
Employee notification requirements
* For calendar year plans.
Plan Comparison Chart - 2009 * If matching formula is used. Maximum amount shown does not include catch-up contributions. $23,000* 100% of compensation, up to $49,000 Maximum annual contributions (both employer and employee contributions) $2,500 $5,500 Maximum catch-up $11,500 $16,500 Maximum employee deferral SIMPLE IRA Safe Harbor 401(k)
Plan Comparison Chart - 2009 Compensation Profit Sharing Plan Profit Sharing Plan With Safe Harbor 401(k) Provisions Profit Sharing Contribution Salary Deferral Safe Harbor Match Profit Sharing Contribution Total Contribution Owner $245,000 $49,000 * $16,500 * $9,800 * $22,700 * $49,000 Employee 1 $40,000 $8,000 * $2,400 $1,600 * $3,706 * $7,706 Employee 2 $30,000 $6,000 * $1,200 $1,050 * $2,780 * $5,030 Employee 3 $20,000 $4,000 * -0- -0- * $1,853 * $1,853 Total $67,000 $63,589 *Contributions made by owner. $18,000 of employer contributions allocated to Employees 1, 2 and 3. $10,989 of employer contributions allocated to Employees 1, 2 and 3. This is a hypothetical illustration and is not intended to project the performance of a specific plan.
Who Should Consider a Safe Harbor 401(k) Plan?
Who want a 401(k) plan with simplified plan administration
Currently making substantial nonelective contributions to an existing plan
With an existing plan that is top-heavy or has ADP testing problems
Business owners seeking a simple, low-cost retirement plan providing the opportunity to contribute as much as 25% of compensation, up to $49,000 per plan participant for 2009
Plan Comparison Chart SEP-IRA Profit Sharing Maximum service requirement for eligibility 3 of last 5 years 2 years Part-time employees Covered if compensation exceeds $550 per year Covered if working over 1,000 hours per year Vesting 100% immediately Vesting schedules if service requirement is one year or less Loans available No Yes
Business owners with less than 100 employees seeking to establish a 401(k)-type employee savings plan, without the typical administrative costs and complexities associated with a traditional 401(k)
Plan Comparison Chart - 2009 Maximum employee deferral 100% of compensation up to $11,500; $2,500 catch-up contribution age 50 or older 100% of compensation up to $16,500; $5,500 catch-up contribution age 50 or older Required employer contribution Dollar-for-dollar match up to 3% of compensation or 2% non-elective contribution None (unless plan is top heavy) Maximum employer contribution Same as required employer contribution Generally 25% of compensation up to $49,000 Vesting of employer contributions 100% immediately Allowed to vest over time if service requirement is one year or less Required testing None Nondiscrimination and top-heavy Maximum service requirement for eligibility Two preceding years with compensation of $5,000 One year of service at 1,000 hours a year Loans available No Yes SIMPLE IRA 401(k)