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Small Business Retirement Plans
Small Business Retirement Plans
Small Business Retirement Plans
Small Business Retirement Plans
Small Business Retirement Plans
Small Business Retirement Plans
Small Business Retirement Plans
Small Business Retirement Plans
Small Business Retirement Plans
Small Business Retirement Plans
Small Business Retirement Plans
Small Business Retirement Plans
Small Business Retirement Plans
Small Business Retirement Plans
Small Business Retirement Plans
Small Business Retirement Plans
Small Business Retirement Plans
Small Business Retirement Plans
Small Business Retirement Plans
Small Business Retirement Plans
Small Business Retirement Plans
Small Business Retirement Plans
Small Business Retirement Plans
Small Business Retirement Plans
Small Business Retirement Plans
Small Business Retirement Plans
Small Business Retirement Plans
Small Business Retirement Plans
Small Business Retirement Plans
Small Business Retirement Plans
Small Business Retirement Plans
Small Business Retirement Plans
Small Business Retirement Plans
Small Business Retirement Plans
Small Business Retirement Plans
Small Business Retirement Plans
Small Business Retirement Plans
Small Business Retirement Plans
Small Business Retirement Plans
Small Business Retirement Plans
Small Business Retirement Plans
Small Business Retirement Plans
Small Business Retirement Plans
Small Business Retirement Plans
Small Business Retirement Plans
Small Business Retirement Plans
Small Business Retirement Plans
Small Business Retirement Plans
Small Business Retirement Plans
Small Business Retirement Plans
Small Business Retirement Plans
Small Business Retirement Plans
Small Business Retirement Plans
Small Business Retirement Plans
Small Business Retirement Plans
Small Business Retirement Plans
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Small Business Retirement Plans

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  • 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.
  • Transcript

    • 1. Small Business Retirement Plans Exploring Your Options
    • 2.
      • 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
    • 3. O V E R V I E W 1 The Need for Retirement Planning 2 Establishing a Retirement Plan 3 Types of Retirement Plans
    • 4. About UBS Financial Services Inc.
        • $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:
    • 5. The Need for Retirement Planning 1 Will you be ready?
    • 6. Sources of Retirement Income
      • 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
    • 7. 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
    • 8. Reasons to Save for Retirement
      • The impact of inflation on your money
      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)
    • 9. What are the benefits? Establishing a Retirement Plan 2
    • 10. Employer Benefits
        • Reward and retain valued employees
        • Flexible way to save for your own retirement
        • Contributions reduce your current tax bill
        • Tax-deferred compounding of earnings within the plan allows assets to grow faster
    • 11. Employee Benefits
        • Provides savings for retirement through regular contributions
        • Pre-tax contributions (depending on the plan)
        • Tax-deferred earnings
    • 12. Government Regulations
      • Internal Revenue Code (IRC)
        • Describes conditions for tax-favored treatment of retirement plans – tax deductibility and tax-deferred growth
        • Requires that retirement plans must be for the benefit of employees
          • Plans cannot discriminate in favor of owners, officers or other highly compensated employees
        • Limits compensation for retirement plan purposes to $245,000
      • ERISA
        • Imposes reporting and disclosure requirements on employee benefit plans
        • Outlines fiduciary standards
    • 13. Choosing an Appropriate Plan
      • A successful retirement plan requires:
        • Flexible plan documents
        • Set-up and administrative services
        • A wide range of investment options
        • Employee communications
    • 14. 3 Have you considered all the options? Types of Retirement Plans
    • 15. Types of Employer-Sponsored Retirement Plans
      • Qualified Plans
        • Defined Contribution Plans
          • Profit Sharing,
            • Age Weighted, New Comparability
          • 401(k)
          • Money Purchase
        • Defined Benefit Pension Plans
      • IRA-Type Plans
        • SEP-IRA
        • SIMPLE IRA
    • 16. Qualified Plans
        • Employer may be entitled to tax deduction for contributions
        • Employee contributions and earnings on all contributions may be tax-deferred until money is taken out of the plan
        • Employer entitled to tax deduction for contributions
        • Two types:
          • Defined benefit
          • Defined contribution
    • 17. Defined Benefit Pension Plans
        • Annual benefit is determined by formula
        • Annual employer contributions generally are required and determined by an actuarial formula
          • Contributions are not a set percentage of compensation per participant
        • Usually employer-funded with pooled assets
        • Can be used to benefit older employees and longer-service employees
    • 18. Who Should Consider a Defined Benefit Pension Plan?
      • Business owners seeking to provide employees with a pre-determined benefit at retirement and/or to maximize plan benefits for older and longer-service employees
    • 19. Defined Contribution Plans
        • Benefits at retirement depend on:
          • Amount of annual contributions
          • Investment performance
        • Annual limit on deductible employer contributions
          • 25% of all participants’ compensation, up to $49,000 per participant for 2009
        • Individual account balances are maintained for each participant
        • Contributions may be:
          • Discretionary or mandatory
          • Employer-funded, employee-funded, or both
    • 20. Employer-Funded Defined Contribution Plans
        • Profit Sharing Plan
        • Discretionary and flexible contributions
        • Annual deductible contribution limit
          • Generally, 25% of the total compensation of all plan participants, up to $49,000 per participant for 2009
        • Do not need profits to contribute
    • 21. Who Should Consider a Profit Sharing Plan?
      • Business owners seeking a flexible plan design while being able to contribute as much as 25% of compensation up to $49,000 per plan participant for 2009
    • 22. Employer-Funded Defined Contribution Plans
        • Money Purchase Pension Plan
        • Mandatory annual contribution of a set percentage of compensation
        • Annual deductible contribution limit
          • Generally, 25% of the total compensation of all plan participants, up to $49,000 per participant for 2009
        • Due to tax law changes, no longer provides an advantage over profit sharing plans
    • 23. Employer-Funded Defined Contribution Plans
        • Able to skew benefits to a specified group of employees
        • More sophisticated plan design which requires nondiscrimination testing
        • Uses actuarial calculations to determine contributions
        • Requires the service of a pension administration/ actuarial firm
      Age-Weighted Profit Sharing Plan and New Comparability Plan
    • 24. Who Should Consider an Age-Weighted Profit Sharing or New Comparability Plan?
      • Business owners seeking to maximize plan benefits for older and/or longer-service employees who have less time to accumulate retirement assets
    • 25. Employee-Funded Defined Contribution Plans
        • 401(k) Plan
        • Allows employees to contribute up to $16,500 in 2009 through pre-tax salary deferrals
          • Additional $5,500 “catch-up” contribution for employees age 50+
        • Employer may also make matching or discretionary contributions
    • 26. 401(k) Nondiscrimination Testing
        • Actual Deferral Percentage (ADP) Test
        • Actual Contribution Percentage (ACP) Test
    • 27. Who Should Consider a 401(k) Plan?
      • Business owners seeking a retirement plan that allows for employee savings through salary deferrals and the choice to make employer-matching and/or discretionary contributions
    • 28. Safe Harbor 401(k) Plan
      • A simplified alternative to a 401(k) plan
      • Employer can avoid ADP and ACP testing
      • Higher paid employees can make maximum salary deferral contributions
    • 29. Safe Harbor 401(k) Plan
      • 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.
    • 30. 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)
    • 31. 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.
    • 32. Who Should Consider a Safe Harbor 401(k) Plan?
      • Employers:
      • 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
    • 33. Owner-Only 401(k) Plan
        • A 401(k) plan may offer owners larger overall contributions than other plans for businesses with no employees
        • Must still consider the costs and complexities of a 401(k) vs. SEP or SIMPLE
        • The 401(k) salary deferral limit is in the aggregate. Therefore, if you also participate in another company’s 401(k) plan, you are still limited to the annual salary deferral cap
    • 34. Owner-Only 401(k) Plan - 2009
    • 35. Owner-Only 401(k) Plan - 2009
    • 36. Employee Eligibility Requirements for Qualified Plans
        • Maximum employee eligibility requirements that may be set:
          • Age 21
          • Have at least two years of service [only one year for salary deferrals in a 401(k) plan]
          • Have at least 1,000 hours of service per year
        • Union employees and non-resident aliens can generally be excluded
    • 37. How to Establish a Qualified Plan
        • Complete a plan document
        • Adopt the plan by the end of your business’s fiscal year
        • Appoint a trustee
        • Communicate adoption of the plan to employees
    • 38. How to Establish a Qualified Plan (con’t)
        • Consider hiring a professional plan administration firm (or recordkeeper) to handle plan administration
        • Determine who will act as plan fiduciaries (individuals or committees)
    • 39. Who Is a Fiduciary?
      • A fiduciary is any person who:
        • Exercises any discretionary authority over the management of plan assets
        • Has any discretionary authority or responsibility for administration of the plan
        • Provides certain types of investment advice to the plan for a fee or other compensation
    • 40. Fiduciary Responsibilities
      • A fiduciary’s duties include the duty to:
        • Act solely in the interest of plan participants and beneficiaries
        • Act for the exclusive purpose of providing benefits to plan participants and beneficiaries
        • Defray the reasonable expenses of administering the plan
        • Diversify plan assets
        • Act in accordance with plan documents (to the extent consistent with ERISA)
        • Act prudently
    • 41. Investment Direction
      • 404(c) of ERISA – Limiting Fiduciary Responsibility
        • An employer can choose to direct investments or give participants investment control.
        • Under 404(c) of ERISA, an employer can limit its fiduciary responsibilities by allowing participants to exercise control over plan assets.
        • Generally, the plan must:
          • Include at least three diversified investment alternatives
          • Provide sufficient information to allow participants to make informed investment decisions
          • Allow participants to change investments at least quarterly
    • 42. Services of a Plan Administration Firm
      • The services of a plan administration firm may include:
        • Determining eligibility, amount of contributions and vesting schedules of participants
        • Providing actuarial certifications for defined benefit plans
        • Recordkeeping of participant account balances, including investment allocations, investment earnings and loan balances
        • Supplying statements to employer and participants
        • Distribution of employee education materials
        • Processing distributions, withholding and IRS reporting
        • Performing nondiscrimination and other testing
    • 43. Advantages of Qualified Plans
        • Variety of plan types from which to choose
        • Loans to participants available
        • Vesting schedules available
    • 44. IRA-Type Plans
        • Contributions are placed in each participant’s separate IRA
        • Contributions may be tax-deductible (employer) or pre-tax (employee)
        • All contributions are 100% vested at all times
        • Distribution rules are generally the same as those for traditional IRAs
    • 45. Employer-Funded IRA-Type Plans
        • SEP-IRA – Simplified Employee Pension Plan
        • Discretionary and flexible contributions
        • 25% of compensation, up to $49,000 annual contribution limit
        • Maximum employee eligibility requirements are:
          • 21 years of age and
          • Service in any preceding three of five years (part-time employees included)
          • Employer can choose to be less restrictive
    • 46. Who Should Consider a SEP-IRA Plan?
      • 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
    • 47. 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
    • 48. Employee-Funded IRA-Type Plans
        • 100 employee limit
        • Employee pre-tax salary deferral contributions up to 100% of compensation or $11,500 annually (additional $2,500 for employees age 50+)
        • No nondiscrimination tests
        • Annual employer contributions required:
          • 100% match up to 3% of compensation (can be lowered to 1% of compensation in 2 of 5 years) or
          • 2% of compensation to all eligible employees
        • Employee eligibility is service in two preceding years and over $5,000 in compensation
        • SIMPLE IRA – Savings Incentive Match Plan for Employees
    • 49. Who Should Consider a SIMPLE IRA Plan?
      • 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)
    • 50. 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)
    • 51. Advantages of SEP and SIMPLE Plans
        • No recordkeeping or IRS reporting
        • Potentially no employer fiduciary responsibility over plan investments
        • Lower cost
        • Easier to establish and maintain than qualified plans
    • 52. How to Establish an IRA-Type Plan
        • Complete a plan adoption agreement
        • Notify eligible employees about plan and distribute a copy of the plan document to them
        • Eligible employees need to complete an IRA Application and Adoption Agreement
    • 53. Small Business Tax Credit for New Retirement Plan Expenses
        • Tax credit for 50% of the first $1,000 in expenses
          • $500 maximum
        • Eligible expenses are for administration and retirement education for the first three years of a new plan
        • Eligible new plans are defined benefit plans, defined contribution plans, SEP-IRAs or SIMPLE IRAs established after 12/31/2001
        • Generally available to businesses with 100 or fewer employees and at least one non-HCE (Non-Highly Compensated Employee)
    • 54. How Can UBS Financial Services Inc. Help?
      • UBS Financial Services Inc. can help you by:
        • Providing prototype plan documents you can use to establish a plan for your business
        • Educating your employees about the plan
        • Educating you and your employees about your investment choices
        • Helping you navigate among the array of investment choices available
        • Building an effective and lasting working relationship between you and your Financial Advisor
    • 55. How Can UBS Financial Services Inc. Help?
      • If your business has an existing retirement savings plan, UBS Financial Services Inc. can help you address concerns about:
        • Establishing an additional plan
        • A plan that no longer meets your needs
        • Education of plan participants
        • Investment alternatives/diversification
        • Plan costs
        • Lack of contact with your plan provider
    • 56. Contact Information and Legal Entity Layout Box: Select this box and use it to: Insert text - type text and apply a style Insert a Table or MS Graph Resize an object Layout Box: Select this box and use it to: Insert text - type text and apply a style Insert a Table or MS Graph Resize an object Layout Box: Select this box and use it to: Insert text - type text and apply a style Insert a Table or MS Graph Resize an object [Name] Tel: [+XX-XXX-XXX XXXX] [email@XXXX] A A A A A A A A A A A A A A A A A A A A A A A A A A A A A A A A A A A A ABC corp. A A UBS Financial Services Inc. www.ubs.com/financialservicesinc © 2008 UBS Financial Services Inc. All Rights Reserved. Member SIPC. UBS Financial Services Inc. is a subsidiary of UBS AG. Neither UBS Financial Services Inc. nor any of its employees provide legal or tax advice. You should consult with your personal legal or tax advisor regarding your personal circumstances. Layout Box: Select this box and use it to: Insert text - type text and apply a style Insert a Table or MS Graph Resize an object Layout Box: Select this box and use it to: Insert text - type text and apply a style Insert a Table or MS Graph Resize an object Layout Box: Select this box and use it to: Insert text - type text and apply a style Insert a Table or MS Graph Resize an object Layout Box: Select this box and use it to: Insert text - type text and apply a style Insert a Table or MS Graph Resize an object Layout Box: Select this box and use it to: Insert text - type text and apply a style Insert a Table or MS Graph Resize an object Layout Box: Select this box and use it to: Insert text - type text and apply a style Insert a Table or MS Graph Resize an object Layout Box: Select this box and use it to: Insert text - type text and apply a style Insert a Table or MS Graph Resize an object Layout Box: Select this box and use it to: Insert text - type text and apply a style Insert a Table or MS Graph Resize an object Layout Box: Select this box and use it to: Insert text - type text and apply a style Insert a Table or MS Graph Resize an object Layout Box: Select this box and use it to: Insert text - type text and apply a style Insert a Table or MS Graph Resize an object Layout Box: Select this box and use it to: Insert text - type text and apply a style Insert a Table or MS Graph Resize an object Layout Box: Select this box and use it to: Insert text - type text and apply a style Insert a Table or MS Graph Resize an object

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