Retirement Plans Retirement Plans Workshop Workshop Opportunities - - PowerPoint PPT Presentation
Retirement Plans Retirement Plans Workshop Workshop Opportunities Opportunities Th A Th A The Awareness The Awareness Test T t T t Test SMAR # 185-20130429-140984 1 Count the Squares Count the Squares - - Its NOT
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SMAR # 185-20130429-140984
Count the Squares Count the Squares -
It’s NOT about thinking outside the box.
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Signature Resources is a servicemark of Signature Resources Insurance and Financial Services, Inc. Signature Resources Insurance and Financial Services, Inc. is independent of John Hancock. Offering John Hancock Insurance Products. 3 2601 Main Street, Suite 700, Irvine, CA 92614. Phone: (949) 794-0800. CA Insurance License # 0G01527
► Open forum to discuss benefit
Open forum to discuss benefit packages/ tax law changes packages/ tax law changes
► Review common 401k compliance
Review common 401k compliance
► Review common 401k compliance
Review common 401k compliance “red flags” and remedies “red flags” and remedies
► Our
Our Business Model / Players Business Model / Players
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► Businesses with one to
Businesses with one to ???employees ???employees
► Available to
Available to a variety of tax entities a variety of tax entities
► Available to
Available to a variety of tax entities a variety of tax entities
► Focus on employer benefit designs a
Focus on employer benefit designs a d employee benefit d employee benefit d employee benefit d employee benefit
► We help you with your benefit
We help you with your benefit package package
► DA.D. / Attract, Reward and Retain
DA.D. / Attract, Reward and Retain
We specialize in providing the package that allows you We specialize in providing the package that allows you to work the small business pension market to work the small business pension market
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IRS
IRS SIMPLE/401k SIMPLE/401k Compliance Checklist Compliance Checklist
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p
SIMPLE
SIMPLE EGTRRA/401K cycle EGTRRA/401K cycle Document Compliance Document Compliance
►Plan design
►Plan administration services
►Plan funding options
►Plan funding options
►Plan compliance
►Players / Team
►Players / Team
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► IRS / DOL
IRS / DOL
► Small Business Owner/HR/CFO
Small Business Owner/HR/CFO
► Small Business Owner/HR/CFO
Small Business Owner/HR/CFO
► CPA/Accountant
CPA/Accountant
► Third Party Administrator
Third Party Administrator
► Third Party Administrator
Third Party Administrator
► Agent/Broker
Agent/Broker
► Feasibility Study
Feasibility Study - Objective: Objective:
► Feasibility Study
Feasibility Study Objective: Objective: Qualified or Non Qualified or Non-
Qualified
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► Social Security in Jeopardy
Social Security in Jeopardy
► Social Security in Jeopardy
Social Security in Jeopardy
► Pensions Frozen
Pensions Frozen
► Pension Benefit Guaranty Corp on
Pension Benefit Guaranty Corp on
► Pension Benefit Guaranty Corp on
Pension Benefit Guaranty Corp on Verge of Bankruptcy Verge of Bankruptcy
► U.S. Hits Historically Low Savings
U.S. Hits Historically Low Savings Rate Rate
► Medicare Going Broke
Medicare Going Broke S i li H lth C C t S i li H lth C C t
► Spiraling Health Care Costs
Spiraling Health Care Costs
► Skyrocketing Drug Costs
Skyrocketing Drug Costs
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Business Owner Concerns
► I am getting killed with taxes
I am getting killed with taxes I d t d d ti i b i I d t d d ti i b i
► I need more tax deductions in my business
I need more tax deductions in my business
► I would like to save more money today
I would like to save more money today
► Will I have enough money to retire?
Will I have enough money to retire?
► Am I protected from creditors, judgments and sudden
Am I protected from creditors, judgments and sudden d th di bilit ? d th di bilit ? death or disability? death or disability?
► What benefits do I need to provide to A, R and RE and can
What benefits do I need to provide to A, R and RE and can I legally discriminate? I legally discriminate? g y g y
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401k Terms
►Types
Types Trad Trad Vs Roth Vs Roth combo and non combo and non qualifed qualifed
►Types
Types-Trad
. Vs Roth-combo and non combo and non-qualifed qualifed
►Automatic enrollment/communication
Automatic enrollment/communication
►Protection from creditors and judgments
Protection from creditors and judgments
►Fiduiciary
Fiduiciary/administrator/resources /administrator/resources
►Integrated with other benefit package and
Integrated with other benefit package and l /b h ki t l l /b h ki t l g p g g p g players/benchmarking tools players/benchmarking tools
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Compliance “Red Flags???
►Corrective Distributions
Corrective Distributions-
ADP Tests/Safe Harbor rules? Harbor rules? Harbor rules? Harbor rules?
►Compensation/eligibility/liability/bonding?
Compensation/eligibility/liability/bonding? p g y y g p g y y g
►Audits
Audits-
IRS/DOL
►Reporting/Integration/Benchmarking/turnk
Reporting/Integration/Benchmarking/turnk ey packages? ey packages? ey packages? ey packages?
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► New comparability/Cross
New comparability/Cross-
tested vs. SEP’s
► New comparability plans with 401(k) feature
New comparability plans with 401(k) feature -
“the simpler plan” simpler plan” simpler plan simpler plan
► 401(k) safe harbor profit sharing plans
401(k) safe harbor profit sharing plans -
D.A.S.H. plans plans
► Traditional, Cash Balance and Floor Offset
Traditional, Cash Balance and Floor Offset defined benefit plans defined benefit plans
► DB/401(k) or Roth 401(k)
DB/401(k) or Roth 401(k)
► DB/401(k) or Roth 401(k)
DB/401(k) or Roth 401(k)
► DB/DC carve outs
DB/DC carve outs Are you confused?? Are you confused??
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Larger Contributions & Deductions -
Example: Male, Age 50, Annual Compensation of At Least $265,000
TYPE OF PLAN CONTRIBUTION % OF SALARY
Retiring At Age 62
401(k) w/catch-up $24,000 9.0% Profit Sharing /401k $59,500 22.00% Money Purchase $53,000 20.0% Traditional Defined Benefit $199,610 49.0% Defined Benefit/401(k)/PS $ 259 010 64 0% Defined Benefit/401(k)/PS $ 259,010 64.0%
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Case I(a) Case I(a) - Increased Increased Case I(a) Case I(a) Increased Increased Individual Dollar Limit New Individual Dollar Limit New Comp PS Plan Comp PS Plan
Census Age Comp.
Total Owner 50 $150,000 $51,000 34% 90% EE 1 25 20,000 1,250 6.25% 2.3% EE 2 27 20,000 1,250 6.25% 2.3% EE 3 33 20,000 1,250 6.25% 2.3% EE 4 47 30,000 1,875 6.25% 3.1% Total $240,000 $56,625 ($60,000)
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Nondiscrimination in a Defined Nondiscrimination in a Defined Contribution or Defined Benefit Plan Contribution or Defined Benefit Plan can be demonstrated by: can be demonstrated by: Comparing Contributions (Traditional)
Comparing Benefits (Age Weighted)
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This example highlights reasons business owners adopt pension plans.
Employer tax deductible contribution Less estimated tax savings (40%) $56,225
g ( ) , Net cost after estimated tax savings 33,735 Contribution for business owner 51,000 Contribution for business owner 51,000 Net cost after taxes for owner (After tax savings and principal’s contribution)
)
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Not having a Qualified Plan is costing you $17,265 per year!
Compensation (Corporation) Profit Sharing Contribution (Corporation) Contribution Owner – age 55 $ 250,000 $50,000 Spouse of
54 $ 52,000 $24,750 54 Total $302,000 $74,750
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Compensation (Corporation) Profit Sharing Contribution 401(k) Catch up Contribution Total Profit Sharing + g 401(k) Owner- Age 55 $250,000 $33,500 $17,500 $5,500 $56,500 Spouse of Owner Age 54 $52,000 $33,500 $17,500 $5,500 $56,500 Total $302,000 $67,000 $35,000 $11,000 $113,000
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Compensation Defined 401(k) Catch up Total (Corporation) Benefit Contribution Contribution Defined Benefit + 401(k) Owner- Age 55 $250,000 $230,000 $17,500 $5,500 $253,000 Spouse $52,000 $ 75,000 $17,500 $5,500 $ 98,555 p
Age 54 Total $302,000 $305,000 $35,000 $11,000 $351,555 l 6% plus 6% PS
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► Corps
Corps
►C ►S
► Proprietorship
Proprietorship
► Partnerships
Partnerships
► Partnerships
Partnerships
► LLPs or LLCs
LLPs or LLCs
► Tax Exempt
Tax Exempt
► Tax Exempt
Tax Exempt 501(c)(3) 501(c)(3)
►403b’s
403b’s
►P/ S or DB Plans
P/ S or DB Plans
►P/ S or DB Plans
P/ S or DB Plans
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l
► Rules
Rules
► Employees
Employees
P t Ti P t Ti
Part Time
End Of Year
Union U
I ndependent Contractors
Leased
► Vesting
Vesting
► Deadlines (Timetables)
Deadlines (Timetables) Cl ifi ti Cl ifi ti
► Classification
Classification
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Working Past Retirement? Working Past Retirement?
►What
What Wh Wh
►When
When
►Why
Why
►Who
Who
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$17 500 h b i i @ 65 $17 500 h b i i @ 65
► $17,500 a month beginning @ age 65.
$17,500 a month beginning @ age 65.
No reductions for NRAs 62-
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► With $255 000 salary cap
With $255 000 salary cap
► With $255,000 salary cap
With $255,000 salary cap
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Defined Benefit vs. Defined Contribution
Defined Contribution Plans Defined Contribution Plans
Profit sharing plans, 401(k) plans, Simples, SEPs and IRAs
Defines and limits annual contributions
Retirement nest egg is dependant upon market fluctuation
Defined Benefit Plans Defined Benefit Plans Defined Benefit Plans Defined Benefit Plans
Traditional and Fully Insured
Sets forth a defined, guaranteed income at retirement
Allows for larger contribution as needed to fund the benefit
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► Deductions and exemptions phased
Deductions and exemptions phased
$250 000 $250 000 $250,000 $250,000
► Repeal of 415(e) after Jan. 1, 2000
Repeal of 415(e) after Jan. 1, 2000
► Babyboomers
Babyboomers
► Babyboomers
Babyboomers
► Social Security statements
Social Security statements
► Market Impact on 401(k) Plans
Market Impact on 401(k) Plans
► Market Impact on 401(k) Plans
Market Impact on 401(k) Plans
► EGTRRA / PPA ‘06
EGTRRA / PPA ‘06
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Level 1 Level 1 – – Safe Harbor Plans Safe Harbor Plans
► Very small business (1
Very small business (1 -
6 participants)
► Stable cash flow projections for next 5
Stable cash flow projections for next 5 - 10 years 10 years
► Stable cash flow projections for next 5
Stable cash flow projections for next 5 10 years 10 years
► Business owner’s cash flow in excess of
Business owner’s cash flow in excess of $250,000 $250,000
► Business owner will be working in business for
Business owner will be working in business for at least 5 years at least 5 years
► Business owner is at least age 45 and oldest in
Business owner is at least age 45 and oldest in
► Business owner is at least age 45 and oldest in
Business owner is at least age 45 and oldest in the group the group Level 2 Level 2 – – Carveout/Combo Plans (401a4) Testing Carveout/Combo Plans (401a4) Testing 6-
?? Participants
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►Moonlighting Income
Moonlighting Income g g g g
►No controlled group (I.e.
No controlled group (I.e. Professors Authors Professors Authors Professors, Authors, Professors, Authors, Consultants, Board Of Consultants, Board Of Directors Coaches) Directors Coaches) Directors, Coaches) Directors, Coaches)
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Samples of Practicing Professionals
A t l C D i R lt
Number of Number of Total Total Owner’s Owner’s Contribution s Contribution s % to Owners % to Owners
Actual Case Design Results
Owners/ Owners/ Professionals Professionals Employees Employees Contributions Contributions to to Employees Employees 1 24 24 $ 304,503 $ 304,503 $ 83,520 $ 83,520 78% 78% $ $ 2 1 1 $ 309,997 $ 309,997 $ 9,000 $ 9,000 97% 97% 2 8 8 $ 278,242 $ 278,242 $ 20,013 $ 20,013 93% 93% 2 15 15 $ 214,796 $ 214,796 $ 107,972 $ 107,972 67% 67% 2 33 33 $ 357,099 $ 357,099 $ 105,682 $ 105,682 77% 77% 3 2 2 $ 453,226 $ 453,226 $ 28,000 $ 28,000 94% 94% 4 25 25 $ 234,121 $ 234,121 $ 68,711 $ 68,711 77% 77% $ , $ , $ , $ , 4 175 175 $ 785,361 $ 785,361 $ 393,710 $ 393,710 67% 67% 9 100+ 100+ $ 2,062,319 $ 2,062,319 $ 223,448 $ 223,448 90% 90% 14 14 100+ 100+ $ 1 128 954 $ 1 128 954 $ 322 323 $ 322 323 78% 78% 14 14 100+ 100+ $ 1,128,954 $ 1,128,954 $ 322,323 $ 322,323 78% 78% 56 56 64 64 $ 3,898,558 $ 3,898,558 $ 252,468 $ 252,468 94% 94%
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Age Age W W-2* 2* SEP PS SEP PS-
401(k) Trad Trad Def Def Benefit** Benefit**
50 50 $50,000 $12,500 $50,000 $12,500 $35,500 $35,500 $95,000 $95,000 , , , , , , * Consider adding spouse as a participant * Consider adding spouse as a participant – – bona fide employee bona fide employee g p p p g p p p p y p y and reasonable compensation issues and reasonable compensation issues ** Additional ** Additional $26,000 profit sharing 401(k $26,000 profit sharing 401(k) plan could be ) plan could be added
. This is for 2013 tax year and based on 2013 IRS plan limits. limits.
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►Websites
Websites
►Websites
Websites
Freeerisa.com
Benefitlinks com
Benefitlinks.com
IRSGov.org
P bli ti / C P bli ti / C
►Publications / Courses
Publications / Courses
Dearborn / Corbel
IRS Publications / Newsletters
►Free Feasibility Studies/Pension Season
Free Feasibility Studies/Pension Season
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Pursuant to IRS Circular 230, we are providing you with the following notification Pursuant to IRS Circular 230, we are providing you with the following notification: : The The information contained in this presentation is not intended information contained in this presentation is not intended to (and to (and cannot) be used cannot) be used p ( ) by anyone to avoid IRS penalties. This presentation supports the promotion and by anyone to avoid IRS penalties. This presentation supports the promotion and marketing of insurance. You should seek advice based on your particular marketing of insurance. You should seek advice based on your particular circumstances from an independent tax advisor. circumstances from an independent tax advisor. John Hancock Financial Network, its agents, and representatives may not give legal John Hancock Financial Network, its agents, and representatives may not give legal
information purposes only and does not purport to be complete or cover every information purposes only and does not purport to be complete or cover every situation. situation. Tax law is subject to interpretation and legislative change. Tax results and the Tax law is subject to interpretation and legislative change. Tax results and the appropriateness of any product for any specific taxpayer may vary depending on the appropriateness of any product for any specific taxpayer may vary depending on the facts and circumstances. You should consult with and rely on your own independent facts and circumstances. You should consult with and rely on your own independent y y p y y p legal and tax advisers regarding your particular set of facts and circumstances. legal and tax advisers regarding your particular set of facts and circumstances. Although care is taken in preparing this material and presenting it accurately, John Although care is taken in preparing this material and presenting it accurately, John Hancock Financial Network disclaims any express of implied warranty as to the Hancock Financial Network disclaims any express of implied warranty as to the y p p y y p p y accuracy of any material contained herein and any liability with respect to it. This accuracy of any material contained herein and any liability with respect to it. This information is current as of September, 2011. information is current as of September, 2011.
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