Today’s Objectives <ul><ul><li>Introduce you to Sucré-Vail Wealth Advisors </li></ul></ul><ul><ul><li>Discuss the best of ...
Sucré-Vail Wealth Advisors <ul><li>Experts with over 50 years of combined experience </li></ul><ul><li>An RIA since 1997 i...
Defined Contribution Plans – Defined <ul><li>Defined Contribution (DC) Plans : provides for set contribution to be deducte...
Profit Sharing Plans - Defined <ul><li>Profit Sharing Plans provide the maximum flexibility in employer contribution.  A s...
Defined Benefit Plans - Defined <ul><li>Defined Benefit Plans (DB):  promises to provide a participant a monthly benefit b...
Example of DB Plan Contribution <ul><li>As previously mentioned Defined benefit plans benefit older employees.  </li></ul>...
A Cash Balance Plan May Be For You! <ul><li>Make tax deductible contributions over the $49,000 DC limit </li></ul><ul><li>...
Cash Balance Plan – A Closer Look <ul><li>Disadvantages </li></ul><ul><li>Required funding each year </li></ul><ul><li>Mus...
Reason for Using a Combined DB/DC Plan <ul><li>With a Defined Benefit Plan the benefit provided at retirement is subject t...
Fiduciary – What and Who <ul><li>ERISA (the  E mployee  R etirement  I ncome  S ecurity  A ct of 1974)states the requireme...
Department of Labor (DOL) Defines Responsibilities of a Fiduciary   <ul><li>Duty of Loyalty (Exclusive Benefit Rule) </li>...
Role of a Fiduciary   <ul><li>Ongoing </li></ul><ul><li>Time Consuming </li></ul><ul><li>Involves Legal Exposure </li></ul...
Risks for Fiduciaries <ul><li>Running Corporate Retirement Appropriately </li></ul><ul><ul><li>Appropriate analysis </li><...
Broker & Registered Investment Advisor Key Distinctions <ul><li>Registered Investment Advisor </li></ul><ul><li>A RIA, sub...
Sucré-Vail Wealth Advisors Offers You <ul><li>Solutions giving you a multitude of advantages over more traditional plan st...
How We Work Together <ul><li>Sucr é -Vail </li></ul><ul><li>Wealth Advisors </li></ul><ul><li>Prudent Expert </li></ul><ul...
Your Fiduciary Responsibilities <ul><li>Your Check List of “To Do’s” </li></ul><ul><li>Get a second opinion </li></ul><ul>...
In Closing <ul><li>Give us the opportunity to show you how our solution will </li></ul><ul><li>Assist you as the plan Spon...
16862 Royal Crest Drive Houston TX, 77058 Phone: 888.286.9991  www.sucrevailwa.com
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The Best Of Defined Banefit and Defined Contribution Plans

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Introduce you to Sucré-Vail Wealth Advisors
Discuss the best of defined benefit and defined contribution plans
Examine the risks and responsibilities associated with being a plan sponsor
Discuss what a retirement plan fiduciary is
Introduce ways for you to mitigate fiduciary risks and responsibilities
Your fiduciary responsibility – A Second Opinion

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  • Welcome – I’m excited to be here with you this evening. I hope you have lots of fun and learn as well!
  • Read through Today’s objectives, point out that you are happy for questions and that if there are plan specific questions you’ll be around all evening and would be delighted to chat with them one-on-one
  • Read the slide. Share a little “fact” about you and Henry…something they might not know. -How you met, How you started working together…anything!
  • Read slide then point out… With a Defined Contribution Plan the contribution made each year is subject to an annual contribution limit. The Plan currently satisfied IRS discrimination rules by providing the same contribution rate / percentage to all employees. For 2010, the maximum contribution that can be allocated to the account of any participant in a Defined Contribution Plan is $45,000 ($50,000 if over the age of 50.)
  • Talking Points: Read slide …
  • This should be stated by the speaker after reading paragraph 1. This plan in contrast pools the plan funds, participants annual statements reflect accrued benefits and the employers bear the investment risk Next state this: These plans provide employers with the potential for much higher contribution levels than defined contribution plans. The employer contribution is determined each year as the amount needed to fund the benefits provided by the plan. The employer contributions will change to reflect changes in compensation, changes in plan participation and earnings on plan assets. (these plans can potentially be over or under funded) These plans maximize the contributions to older employees.
  • Read the slide. Share your example.
  • Read the slide.
  • Run through the advantages/disadvantages why this might be a fit for their firm.
  • Read the slide. Specifically focus on what the combo DB/DC plan can “achieve” A higher total contribution amount in both plans for owners. Flexibility to design classes of participants that will receive benefits at different levels. A smaller allocable share of costs for employees. The continued opportunity for participants to regulate their contributions by their elective deferral and catch up contributions.
  • Read the slide Point out that there are wide parameters for exactly who a fiduciary actually is and you will discuss this further in a moment
  • Read through each of these… Duty of Loyalty/ Exclusive Benefit Rule – “Acting solely in the interest of plan participants and their beneficiaries and with the exclusive purpose of providing benefits to them” – Duty of Loyalty/ Exclusive Benefit Rule Duty of Prudence/ Prudent Expert Rule – “Carrying out their duties prudently” Duty to Follow Plan Documents – “Following the plan documents (unless inconsistent with ERISA)” Duty to Diversity/Duty to Avoid Large Losses – “Diversifying plan investments” so as to minimize the risk of large losses Duty to Pay Reasonable Plan Expenses Relative to Services Provided – “Paying only reasonable expenses”
  • Talking Points According to the Department of Labor, DOL “ Fiduciary status is based on the functions performed for the plan, not just a person’s title.” Some corporate employees may be surprised to learn that they are fiduciaries. For example, a human resources professional learned that he was considered a fiduciary simply because he handled questions about a participant’s benefit claim. According to a case cited by the law firm of Winston &amp; Strawn. Moreover, the DOL says …”Fiduciary status is based on the functions performed for the plan, not just a person’s title.” Thus it is important to be aware of the responsibilities and actions that fall under the fiduciary umbrella. The penalty can be high…according to the DOL, “Fiduciaries who do not follow the basic standards of conduct may be personally liable to restore any losses to the plan, or to restore any profits made through improper use of the plan’s assets resulting from their actions.” This is serious business we are discussion – with big risks. Let’s be clear…the role of a fiduciary is growing…it is a big job especially for the business owner who is already focused on running the business efficiently and effectively.
  • Read Silde Risks – read each risk Appropriate analysis Expenses in line with the industry Prudent investment choices Reasonable investment results Ongoing monitoring La Rue vs. De Wolff, Boberg &amp; Ass. “ changed the landscape for employers -- lawsuits can be filed by one employee rather than an entire plan” The U.S. Supreme Court’s 2008 decision in the case of LaRue vs. DeWolff, Boberg &amp; Associates, Inc. changed the outlook for retirement plans and their fiduciaries. It established for the first time that lawsuits can be filed when only ONE plan participant – rather than the entire plan – is affected by the breach of fiduciary duty. This recognizes the shift of popularity from defined benefit to defined contribution plans. As Justice John Pail Stevens wrote,” For defined contribution plans, however, fiduciary misconduct need not threaten the solvency of the entire plan to reduce benefits below the amount that participants would otherwise receive.”
  • The public isn’t educated on the differences between the types of advisors and their roles and responsibilities. Talking Points Read Each – talking points in BOLD have been omitted from the slide. A RIA, subject to the Investment Advisors Act of 1940, is a fiduciary. An RIA has a fiduciary duty to place a client’s interests ahead of his own. Fiduciaries are not permitted to seek personal benefit from their transactions with those they represent. Fees tend to be less with an RIA. RIAs are paid an advisory fee usually a percent of assets under their care. RIAs have no incentive to sell any product or to do trading in client accounts. RIAs are agnostic to execution. They get paid for advice rather than for trades. RIAs cannot sell commission products nor do they have proprietary products. RIAs provide a level of independence unavailable with traditional Brokers. Assets are typically held with a third-party custody firm. Broker A Broker is not a fiduciary. A broker, or registered representative, is required only to recommend investments that are “suitable.” In other words, a broker can legally put his own interest above yours when recommending investments “suitable” for the situation. Need to be cautious of multiple layers of fees A broker is essentially a sales agent—and rather than your interests coming first, a broker&apos;s first duty is to his firm. Brokers are often encouraged to push specific products after their parent company cuts deals with vendors. As such, the client may not be offered the most economical fee/commission payment option or fees might be disguised. Brokerage firms are usually investment product manufacturers who see their broker/employees as the prime distribution channel to sell their products. An investor must consider the parent firm of the broker, the stability of the custodian and many other factors. The nature of a broker’s compensation and his relationship with his employer may diminish a client’s chance of achieving a fee-efficient, tax-efficient, well-performing portfolio. If a broker takes commissions from the funds that he buys, his decisions might be biased or self-serving. The integrity of advice may be compromised. When sales incentives or job security issues drive a broker’s buying decisions, his client’s interests may suffer.
  • Talking Points Of all the business decisions you face, one of the most important is choosing the right retirement savings plan for your company. It is a decision that will affect your company’s ability to attract and retain the best employees, and will ultimately impact their long-term security. Equally important are the fiduciary challenges you face on a daily basis as a plan sponsor. Sucré-Vail Wealth Advisors’ solution gives you a multitude of advantages and benefits read through each of these benefits!
  • Use this chart – SVWA’s Fiduciary Retirement Plan Process to explain how all of the parties work together and how SVWA acts as the coordinating link.
  • As a Fiduciary there are some things that you must “do” to fulfill your role. One of these responsibilities to get a “second opinion” on your specific plan to ensure that you are following: Duty of Loyalty (Exclusive Benefit Rule) Duty of Prudence (Prudent Expert Rule) Duty to Follow Plan Documents Duty to Diversity (Duty to Avoid Large Losses) Duty to Pay Reasonable Plan Expenses Relative to Services Provided Don’t wait…schedule time today to meet with one of our experts to fulfill this role.
  • Henry’s slide… Read through the slide. Thank them for their time. Ask them if they have any questions for each of you. Tell them you’ll be around all evening for questions/discussion.
  • Thank you for your time and attention this evening. I look forward to chatting with each of you individually as we have lots of fun and enjoy “TAPAS” and “WINE” this evening!!!
  • The Best Of Defined Banefit and Defined Contribution Plans

    1. 2. Today’s Objectives <ul><ul><li>Introduce you to Sucré-Vail Wealth Advisors </li></ul></ul><ul><ul><li>Discuss the best of defined benefit and defined contribution plans </li></ul></ul><ul><ul><li>Examine the risks and responsibilities associated with being a plan sponsor </li></ul></ul><ul><ul><li>Discuss what a retirement plan fiduciary is </li></ul></ul><ul><ul><li>Introduce ways for you to mitigate fiduciary risks and responsibilities </li></ul></ul><ul><ul><li>Your fiduciary responsibility – A Second Opinion </li></ul></ul>
    2. 3. Sucré-Vail Wealth Advisors <ul><li>Experts with over 50 years of combined experience </li></ul><ul><li>An RIA since 1997 in the State of Texas </li></ul><ul><li>SVWA makes available to our clients </li></ul><ul><ul><li>Premier wealth management services </li></ul></ul><ul><ul><li>Fiduciary retirement plan management </li></ul></ul>
    3. 4. Defined Contribution Plans – Defined <ul><li>Defined Contribution (DC) Plans : provides for set contribution to be deducted, employees contributions are always 100% vested whereby employers contributions more often have vesting schedules which are stated under the terms of the plan (this plan is also referred to as individual account plan since each participant has a separate accounts for accruing plan contributions and bear the investment risk) </li></ul><ul><li>Here are some examples of DC plans- Defined Contribution Plan Types: </li></ul><ul><li>Simple 401(k)- $11,500/$2,500 Limits </li></ul><ul><li>SEP-IRA </li></ul><ul><li>Profit Sharing </li></ul><ul><li>Money Purchase </li></ul><ul><li>The maximum contribution to an employee’s account during plan year 2010 is $49,000 with the catch up provision for employees over the age of 50 their maximum is $54,500 </li></ul>
    4. 5. Profit Sharing Plans - Defined <ul><li>Profit Sharing Plans provide the maximum flexibility in employer contribution. A specified contribution is not required each year. The employer may vary the contribution from year-to-year or not contribute at all, to reflect the cash flow profitability of the practice or other business considerations. </li></ul><ul><li>Minimum Contribution: None </li></ul><ul><li>Maximum Contribution: 25% of total payroll </li></ul><ul><li>Maximum Allocation to an Individual: Lesser of 100% of W-2 or </li></ul><ul><li>$50,000 </li></ul><ul><li>Types of Profit Sharing Plans </li></ul><ul><li>Integrated Profit Sharing Plan </li></ul><ul><li>Age-weighted Profit Sharing Plan </li></ul><ul><li>Cross-Tested Profit Sharing Plan (also referred to as Super Integrated, New Comparability or Tiered Allocation) </li></ul>
    5. 6. Defined Benefit Plans - Defined <ul><li>Defined Benefit Plans (DB): promises to provide a participant a monthly benefit beginning at retirement and payable as long as he lives. The amount of this benefit is usually based on age, years of service and how much the participant earned during his highest-paid three consecutive years of employment while the plan continues to be in place. The maximum annual lifetime benefit payable to participant upon retirement is $195,000 in 2010. </li></ul><ul><li>DB plans provide employers with the potential for much higher contribution levels than defined contribution plans. T </li></ul><ul><li>DB plans maximize the contributions to older employees. </li></ul><ul><li>There are two types of Defined Benefit Plans </li></ul><ul><ul><ul><li>Traditional </li></ul></ul></ul><ul><ul><ul><li>Cash Balance (differs because the annual contribution has a guaranteed interest rate for accrual proposes) </li></ul></ul></ul>
    6. 7. Example of DB Plan Contribution <ul><li>As previously mentioned Defined benefit plans benefit older employees. </li></ul><ul><li>All things being equal given a 55 year old employee with a retirement age of 65 will have 10 years to accumulate his life </li></ul><ul><li>time benefit verses a 30 years old employee with a retirement </li></ul><ul><li>age of 65 will have 35 years to accumulate his life time benefit, which means the annual contribution for the older employee </li></ul><ul><li>would be much higher . </li></ul>
    7. 8. A Cash Balance Plan May Be For You! <ul><li>Make tax deductible contributions over the $49,000 DC limit </li></ul><ul><li>Slant contribution amounts in your favor </li></ul><ul><li>Incremental increase of employee contribution costs </li></ul><ul><li>Conservatively invested </li></ul>8
    8. 9. Cash Balance Plan – A Closer Look <ul><li>Disadvantages </li></ul><ul><li>Required funding each year </li></ul><ul><li>Must be in place a least three to five years </li></ul><ul><li>Potential differences between actual plan assets and theoretical cash balance at termination </li></ul><ul><li>Advantages </li></ul><ul><li>Looks like a DC plan to participants </li></ul><ul><li>More attractive to younger employees </li></ul><ul><li>Set rate of return reflected on statements </li></ul><ul><li>Higher accruals are permitted (with larger deductions) </li></ul><ul><li>Conservative investments </li></ul>
    9. 10. Reason for Using a Combined DB/DC Plan <ul><li>With a Defined Benefit Plan the benefit provided at retirement is subject to a benefit limit. ($195,000 for 2010) For this reason Defined Benefit Plans are often considered to favor older employees. </li></ul><ul><li>A much higher contribution can be allocated for the benefit of a participant in the Defined Benefit Plan and is mandatory funding each year giving employers little or no flexibility </li></ul><ul><li>A combination of Defined Benefit and Defined Contribution Plans can achieve the following objectives: </li></ul><ul><ul><li>A higher total contribution amount in both plans for owners. </li></ul></ul><ul><ul><li>Flexibility to design classes of participants that will receive benefits at different levels. </li></ul></ul><ul><ul><li>A smaller allocable share of costs for employees. </li></ul></ul><ul><ul><li>The continued opportunity for participants to regulate their contributions by their elective deferral and catch up contributions. </li></ul></ul>
    10. 11. Fiduciary – What and Who <ul><li>ERISA (the E mployee R etirement I ncome S ecurity A ct of 1974)states the requirements for enforcement of fiduciary responsibilities amongst other items for these plans </li></ul><ul><li>A retirement plan fiduciary is anyone who is named as a fiduciary in the retirement plan documents or who exercises discretionary control over the plan’s operation. </li></ul><ul><li>An individual committee or company may be a fiduciary if it is named in plan documents, exercises discretionary control over the management or administration of the plan or its assets, provides ongoing investment management or advice to the plan or to plan participants, selects or supervises other plan fiduciaries </li></ul>
    11. 12. Department of Labor (DOL) Defines Responsibilities of a Fiduciary <ul><li>Duty of Loyalty (Exclusive Benefit Rule) </li></ul><ul><li>Duty of Prudence (Prudent Expert Rule) </li></ul><ul><li>Duty to Follow Plan Documents </li></ul><ul><li>Duty to Diversity (Duty to Avoid Large Losses) </li></ul><ul><li>Duty to Pay Reasonable Plan Expenses Relative to Services Provided </li></ul>
    12. 13. Role of a Fiduciary <ul><li>Ongoing </li></ul><ul><li>Time Consuming </li></ul><ul><li>Involves Legal Exposure </li></ul><ul><li>Under Scrutiny by Regulators </li></ul><ul><ul><li>Department of Labor </li></ul></ul><ul><ul><li>ERISA (if you have employees) </li></ul></ul>
    13. 14. Risks for Fiduciaries <ul><li>Running Corporate Retirement Appropriately </li></ul><ul><ul><li>Appropriate analysis </li></ul></ul><ul><ul><li>Expenses in line with the industry </li></ul></ul><ul><ul><li>Prudent investment choices </li></ul></ul><ul><ul><li>Reasonable investment results </li></ul></ul><ul><ul><li>Ongoing monitoring </li></ul></ul><ul><li>La Rue vs. DeWolff, Boberg & Associates, Inc. </li></ul><ul><li>Employers are being scrutinized and your risk of being under the regulators microscope is increasing </li></ul>
    14. 15. Broker & Registered Investment Advisor Key Distinctions <ul><li>Registered Investment Advisor </li></ul><ul><li>A RIA, subject to the Investment Advisors Act of 1940 and has a fiduciary duty to place a client’s interests ahead of his own. </li></ul><ul><li>Fees tend to be less with an RIA.. </li></ul><ul><li>An RIA gets paid for advice rather than for trades, thus no incentive to do trading in client accounts </li></ul><ul><li>An RIA cannot sell commission products nor are they allowed proprietary products. </li></ul><ul><li>An RIA provide a level of independence unavailable with traditional Brokers. </li></ul><ul><li>Assets are typically held with qualified third-party custody firm. </li></ul><ul><li>Broker </li></ul><ul><li>A Broker is not a fiduciary. A broker, or registered representative, is required only to recommend investments that are “suitable.” </li></ul><ul><li>Lack of requirement to provide full disclosure – possibility of multiple layers of fees. </li></ul><ul><li>A broker is essentially a sales agent of his/her firm </li></ul><ul><li>Brokers are often tied to specific products because of negotiated deals between vendors and their parent company. </li></ul><ul><li>An investor should consider the parent firm of the broker and the stability of the custodian among many other factors. </li></ul>
    15. 16. Sucré-Vail Wealth Advisors Offers You <ul><li>Solutions giving you a multitude of advantages over more traditional plan structure, set-up and services </li></ul><ul><ul><li>Institutional investment management expertise </li></ul></ul><ul><ul><li>Quality investment options </li></ul></ul><ul><ul><li>State-of-art recordkeeping and plan administration </li></ul></ul><ul><ul><li>Customizable employee education and communication program </li></ul></ul><ul><ul><li>Fiduciary protection program </li></ul></ul><ul><ul><li>Reduction of legal exposure </li></ul></ul><ul><ul><li>Deliver ongoing client communications and performance reports </li></ul></ul><ul><ul><li>Help to mitigate fiduciary risks </li></ul></ul>
    16. 17. How We Work Together <ul><li>Sucr é -Vail </li></ul><ul><li>Wealth Advisors </li></ul><ul><li>Prudent Expert </li></ul><ul><li>Co-Fiduciary </li></ul><ul><li>Navigating away fiduciary risk </li></ul><ul><li>Plan Sponsor </li></ul><ul><li>Files plan reports with Government </li></ul><ul><li>Delegates responsibilities as necessary </li></ul><ul><li>Hires, monitors and holds accountable other fiduciaries and/or service providers </li></ul>ERISA Attorney Oversees legal compliance <ul><li>Third Party Administrator </li></ul><ul><li>(TPA) </li></ul><ul><li>Provides operational compliance and reporting requirements </li></ul><ul><li>Record keeper </li></ul><ul><li>Maintains individual plan participant information </li></ul><ul><li>Qualified Custodian </li></ul><ul><li>Holds plan investments </li></ul>Formal Written agreement of Specific Fiduciary Responsibilities Plan Participants 2 way coordination <ul><li>Broadly diversified investment portfolios designed to reduce the risk of large losses </li></ul><ul><li>Ongoing communication and access to SVWA team </li></ul><ul><li>Individual quarterly participant progress meetings </li></ul><ul><li>Transparent and appropriate information to monitor and evaluate investment management </li></ul><ul><li>Documentation to assure costs are reasonable relative to services provided </li></ul>2 way coordination
    17. 18. Your Fiduciary Responsibilities <ul><li>Your Check List of “To Do’s” </li></ul><ul><li>Get a second opinion </li></ul><ul><li>Understand who within your firm is a fiduciary – educate yourself and those with fiduciary responsibilities </li></ul><ul><li>Review a second opinion to see how you can improve your retirement offering and mitigate risks associated with being a fiduciary </li></ul>
    18. 19. In Closing <ul><li>Give us the opportunity to show you how our solution will </li></ul><ul><li>Assist you as the plan Sponsor in understanding your fiduciary obligations </li></ul><ul><li>Facilitate the MOM program an institutional investment process that provides the foundation of fiduciary compliance for you as plan sponsor </li></ul><ul><li>Leverage technology from our partners to document the process while providing state of the art recordkeeping and plan administration. </li></ul><ul><li>Illustrate our commitment of full disclosure on all fees </li></ul><ul><li>Provide customize on going education for your employees to successfully prepare for retirement </li></ul>
    19. 20. 16862 Royal Crest Drive Houston TX, 77058 Phone: 888.286.9991  www.sucrevailwa.com

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