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Sfr Retirement Plan 05 13 09

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Summit Financial Resources, Inc.

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Sfr Retirement Plan 05 13 09

  1. 1. SFR Retirement Plan Consultants, LLC.<br />4 Campus Drive<br />Parsippany, NJ 07054-0413<br />(973) 285-4729 – Direct<br />(973) 285-3666 – FAX<br />(908) 347-9054 – Cell<br />wgundrum@sfr1.com – E-Mail<br />
  2. 2. Private Wealth ManagementWilliam B. Gundrum, IIISenior Wealth Advisor<br />As a fully licensed investment professional for more than 31 years, Bill implements wealth-management strategies for owners of privately held companies and individuals by concentrating on portfolio management and qualified plans.<br /> Utilizing a consultative approach and specializing in the intricacies of retirement plan options, the major thrust of Bill’s works is demonstrating to individuals and corporations how they can maximize pension fund accrual while minimizing tax consequences. Through in-depth feasibility studies, best choice options are demonstrated relative to federal, state and estate tax issues.<br />An alumnus of The Citadel with a Bachelor of Science in Business Administration, Bill has continued to expand his learning via numerous advanced industry sponsored courses in retirement, estate and personal/corporate financial planning.<br /> A native of Westfield, NJ, Bill currently resides there with his wife Monica and their three children. In addition to playing golf, Bill has been extremely active as a coach and a Board Member of the Westfield Soccer Association and the Westfield Baseball Association.<br />
  3. 3. Mission Statement<br /><ul><li>Develop a wealth management team, which will be focused on devising strategies that will enable physician’s to maximize their retirement accruals while minimizing federal, state and estate tax consequences.
  4. 4. The proposed clientele (physicians) are extremely interested in discussing wealth accumulation, asset protection, tax management and liability (mal-practice). While I am capable of discussing many different types of asset protection and wealth accumulation vehicles, my primary focus will be on demonstrating how clients can maximize and protect their assets via the qualified plan.
  5. 5. Create strategic alliance’s with CPA’s, Attorney’s, Practice Management and Medical Mal-Practice provider’s, which will enable the team to maximize the opportunity for all parties.</li></li></ul><li>Business Concept<br />The Economic Growth & Tax Relief Reconciliation Act of 2001 [EGTRRA] – this legislation, which took effect on January 1, 2002, ended a fifteen year trend in pension policy reform, which was driven by fiscal policy. This resulted in a lowering of tax deductions, contributions and benefits. At the same time, restrictive non-discrimination and top-heavy rules and reporting responsibilities burdened plan sponsors. EGTRRA reversed this policy and resulted in increased: benefit limits, contributions, funding, tax deductions and plan portability provisions. In addition, catch-up contributions were introduced allowing individuals &gt;50 to accelerate their retirement funding. When combined with our rapidly aging population [Baby-Boomer’s], this law created a significant tax planning opportunity in the qualified plan marketplace.<br />Pension Protection Act of 2006 [PPA] – in August, PPA was signed into law and has become the most comprehensive pension reform package since ERISA was passed in 1974. PPA made the EGTRRA provisions permanent. This law has created significant planning opportunities for advisors who cater to employers who sponsor retirement programs.<br />(See attached highlights of PPA)<br />Asset Protection Planning – in today’s litigious society, physician’s are extremely concerned with shielding their assets from the claims of creditors.<br />Tax Planning – significant planning opportunities will arise via the qualified plan.<br />
  6. 6. Ideal Target Market<br />Target Market – Physicians Group’s<br />▪ Anesthesiologists<br /> ▪ Cardiologists – [$400,200]*<br /> ▪ Dermatologists – [$254,000]*<br /> ▪ ER Physician’s<br /> ▪ Gastroenterologist’s – [$300,000]*<br /> ▪ Radiologist’s<br /> ▪ Surgeon’s<br />*Medical Economics - 2006<br />Strategies<br />▪ Asset Protection Planning<br /> ▪ Qualified Plans, FLP’s, LLC’s, Trusts & Other<br /> ▪ Retirement/Financial Planning via <br /> Qualified Plan = Personal Assets<br /> ▪ Life & Disability Insurance<br /> ▪ Malpractice & Professional Liability Coverage<br />
  7. 7. Most people don’t plan to fail.<br />They just fail to plan.<br />
  8. 8. Mission<br />I am in the business of helping individuals and business owners to become and remain financially independent. Financial Independence means the ability, at a certain point in your life, to have the lifestyle that you want…working when you want to, but not needing to work. Financial Independence is not achieved by your working…it’s done by putting your money to work. It doesn’t come from earnings…it comes from your investments.<br />
  9. 9. Wealth Management Resources<br />
  10. 10. IRS Limits On Benefits & Compensation for Qualified Plans, SEP(s) & Simple(s)<br />20092008200720062005<br />Qualified Retirement Plan<br />Compensation Limit $245,000$230,000$225,000 $220,000 $210,000 <br />Defined Benefit<br />Annual Benefit Limit $195,000 $185,000 $180,000 $175,000 $170,000 <br />401(k)/403(b)/457(b)<br />Calendar Year Deferral Limit $16,500 $15,500 $15,500 $15,000 $14,000 <br />Annual Defined Contribution Limit $49,000 $46,000 $45,000 $44,000 $42,000 <br />Catch-Up Contribution Limit &gt;50 $5,500 $5,000 $5,000 $5,000 $4,000 <br />Simple Plan<br />Calendar Year Deferral Limit $11,500$10,500$10,500 $10,000 $10,000 <br />Catch-Up Contribution Limit &gt;50 $2,500 $2,500 $2,500 $2,500 $2,000 <br />IRA Traditional/Roth$5,000 $5,000<br />Catch-Up Contribution Limit &gt;50 $1,000 $1,000 $1,000 $1,000 $500<br />SEP Contribution Eligibility<br />Minimum Compensation Requirement $550$500$500 $450 $450 <br />Highly Compensated Definition<br />Compensation Test $110,000$105,000$100,000 $100,000 $95,000 <br />Top-Heavy Key EE Definition<br />Officer Test $150,000$145,000 $140,000 $135,000 <br />Social Security<br />Taxable Wage Base $106,800 $102,000$97,500 $94,200 $90,000 <br />
  11. 11. Retirement Plans – Defined Contribution<br />401(k) Plan<br />◊ Employer sponsored plan, which allows employees to defer money on a pre-tax basis.<br /> ◊ Maximum salary deferral is 100% of compensation or $16,500 in [2009], whichever is less. Employees age 50+ are allowed to defer up to $22,000 in [2009].<br /> ◊ Section 415 limit, which may be allocated to an individuals account in [2009] is the lesser of 100% of compensation, or $49,000 ($54,500 if 50+).<br /> ◊ Compensation limit is $245,000.<br />Profit Sharing Plan<br /> ◊ Employer may contribute up to 25% of total compensation to all eligible employees.<br /> ◊ Maximum amount that may be allocated to any one participant is 100% of compensation, or $49,000, whichever is less.<br /> ◊ Contribution percentage and dollar amount may vary from year to year.<br />Age-Weighted Profit Sharing Plan<br /> ◊ Allows employers to make discretionary contributions each year based on each participant’s age and salary.<br />Tiered Profit Sharing Plan<br /> ◊ Allows contributions to be allocated based on job classification, or compensation categories. Generally enables employers to allocate greater contributions to “key” employees, especially owners.<br />
  12. 12. Retirement Plans – Defined Benefit<br />A Defined Benefit Plan states what benefit a participant will receive at a future (normal retirement age) point in time. An actuary will determine how much needs to be contributed in order to provide the benefit. The actuary may include compensation up to $245,000 [2009] when calculating the benefit. The maximum benefit that can be funded [2009] is $195,000/year, which is indexed for inflation.<br />Flat Benefit Plan<br />◊ Under a Flat Benefit Plan, a participant’s benefit is usually stated as a specified percent of compensation. i.e. $40,000/year X 40% = $16,000<br />Floor-Offset Plan<br /> ◊ Under a Floor-Offset Plan, the plan provides a specified benefit that is subsequently offset by a specified amount. This offset is based on allocations that are provided to the employee in another plan. The amount of the reduction cannot exceed the lesser of 50% of the original benefit, or 26.25% of the employee’s final average compensation.<br />Cash Balance Plan<br /> ◊ A Cash Balance Plan defines the benefit for each employee by reference to a separate account maintained for each participant. An employee’s account receives allocations and is credited with interest at a rate determined in accordance with the plan<br />Fully Insured Plan (IRC Sec. 412(i))<br /> ◊ A Fully Insured Plan is funded exclusively with the purchase of individual annuity contracts. The benefits provided by the plan are equal to the benefits provided by the cash surrender value of the policy at normal retirement and are guaranteed by the insurance carrier.<br />
  13. 13. 401(k)/Profit Sharing Planning Assumptions<br />Add [25] 401(k)/Profit Sharing client’s/year for [10] years.<br />Assume $1,000,000 of take over assets/plan.<br />Assume $500,000 of flow/plan.<br />Assume 8% annual growth rate.<br />
  14. 14. Financial Plan – 401(k)/Profit Sharing Plans<br /> Total Take Over Annual <br />YearClient Clients AssetsContributionSub-TotalTotal AssetsAnnual Commission<br />1 25 25 $25,000,000 $12,500,000 $37,500,000 $37,500,000 $375,000<br />2 25 50 $25,000,000 $25,000,000 $50,000,000 $78,000,000 $780,000<br />3 25 75 $25,000,000 $37,500,000 $62,500,000 $134,240,000 $1,342,400<br />4 25 100 $25,000,000 $50,000,000 $75,000,000 $207,479,200 $2,074,792<br />5 25 125 $25,000,000 $62,500,000 $87,500,000 $299,077,536 $2,990,775<br />6 25 150 $25,000,000 $75,000,000 $100,000,000 $410,503,739 $4,105,037<br />7 25 175 $25,000,000 $87,500,000 $112,500,000 $543,344,038 $5,433,440<br />8 25 200 $25,000,000 $100,000,000 $125,000,000 $699,311,561 $6,993,116<br />9 25 225 $25,000,000 $112,500,000 $137,500,000 $880,256,486 $8,802,565<br />10 25 250 $25,000,000 $125,000,000 $150,000,000 $1,088,177,005 $10,881,770<br />
  15. 15. Defined Benefit Maximums<br />Retirement Maximum <br />Age Monthly Benefit - [2009]*Lump Sum - [2009]**<br />55 $10,048 $1,667,475<br />60 $14,104 $2,139,462<br />62 $16,250 $2,363,900<br />65 $16,250 $2,206,087<br />*Based on 5% Interest & Assuming 10 Years of Plan Participation<br />**Based on 51/2% Interest [Minimum Rate]<br />
  16. 16. Projected Defined Benefit Plans w/Insurance<br />YearPlansPremiumTotal<br />1 [12] X $75,000 = $900,000<br />2 [12] X $75,000 = $900,000<br />3 [12] X $75,000 = $900,000<br />4 [12] X $75,000 = $900,000<br />5 [12] X $75,000 = $900,000<br />
  17. 17. Proposed Services<br />Life Insurance<br />▪ Survivorship Insurance<br /> ▪ Individual Insurance<br /> ▪ Non-Qualified Deferred Compensation<br /> ▪ Buy-Sell Insurance<br /> ▪ Key Man Insurance<br />Disability Insurance<br /> ▪ Individual Protection<br /> ▪ Retirement Contribution Protection<br /> ▪ Overhead Coverage<br /> ▪ Buy-Sell Funding<br /> ▪ Key Man Coverage<br />Family/Personal Planning<br /> ▪ Do you have a properly structured & implemented Last Will & Testament, Durable Power of Attorney & Advance Health Care Directive.<br /> ▪ Legal structures, which will enable you to “share” income with family members, in lower income tax brackets, pass wealth, protect assets from lawsuits, without giving up control.<br /> ▪ Generation Planning<br /> ▪ Charitable Planning Options<br />Business Planning<br />▪ Determine appropriate structure – [“S” Corp, “C” Corp, LLC, FLP, PC, PA, LLP, etc.<br /> ▪ Evaluate, recommend & implement cost effective retirement planning vehicles.<br /> ▪ Achieve financial benefits while minimizing employee participation.<br /> ▪ Create new opportunities for financial services and property and casualty coverage.<br />Strategies<br />▪ Advanced Asset Protection via Qualified Plans<br />▪ Domestic Asset Protection – [LLC’s. FLP’s, Trusts<br />& others]<br />▪ International Asset Protection<br />
  18. 18. Sample Retirement Plan<br />Projected [2009] Profit Sharing <br />NameCompensation401(k)Match – 4%ContributionTotalCash BalanceTotal<br />Partner #1 $245,000 $16,500 $9,800 $22,700 $49,000 $45,000 $94,000<br />Partner #2 $245,000 $16,500 $9,800 $22,700 $49,000 $87,000 $136,000<br />Partner #3 $245,000 $22,000 $9,800 $22,700 $54,500 $171,000 $225,500<br />Partner #4 $245,000 $22,000 $9,800 $22,700 $54,500 $138,000 $192,500<br />Partner #5 $245,000 $16,500 $9,800 $22,700 $49,000 $57,000 $106,000<br />Partner #6 $245,000 $22,000 $9,800 $22,700 $54,500 $110,000 $164,500<br />Partner #7 $245,000 $22,000 $9,800 $22,700 $54,500 $192,000 $246,500<br />Partner #8 $245,000 $22,000 $9,800 $22,700 $54,500 $138,000 $192,500<br />Partner #9 $245,000 $16,500 $9,800 $22,700 $49,000 $100,000 $149,000<br />Partner #10 $245,000 $16,500 $9,800 $22,700 $49,000 $82,000 $131,000<br />Partner #11 $245,000 $16,500 $9,800 $22,700 $49,000 $35,000 $84,000<br />Partner #12 $245,000 $16,500 $9,800 $22,700 $49,000 $61,000 $110,000<br />Partner #13 $245,000 $22,000 $9,800 $22,700 $54,500 $110,000 $164,500<br />Partner #14 $245,000 $16,500 $9,800 $22,700 $49,000 $45,000 $94,000<br />Partner #15 $245,000 $22,000 $9,800 $22,700 $54,500 $167,000 $221,500<br />Partner Total $3,675,000$286,000$147,000$340,500$773,500$1,538,000$2,311,500<br />
  19. 19. Sample Retirement Plan - continued<br />Employee Projected [2009] Profit Sharing<br />Profit SharingCompensation401(k)Match – 4%ContributionTotalCash BalanceTotal<br />HCE $384,000 $ $5,900 $28,800 $34,700 $ -0- $34,700<br />Non – HCE $5,242,000 $ $69,800 $393,150 $462,950 $ -0- $462,950<br />Sub-Total $5,626,000$$75,700$421,950$497,650$ -0-$497,650<br />Total $9,301,000$286,000$222,700$762,450$1,271,150$1,538,000$2,809,150<br />Notes: Contributions for HCE’s are flexible. Minimum contribution is 3% of compensation.<br />20082009<br />Compensation Cap $230,000 $245,000<br />Annual Defined Benefit Limit $185,000 $195,000<br />Annual Defined Contribution Limit $46,000 $49,000<br />401(k) Contribution $15,500 $16,500<br />Catch-Up Contribution $5,000 $5,500<br />Key Employee $150,000 $160,000<br />HCE $105,000 $110,000<br />

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