Hicks Pension ServicesHicks Pension Services

• Presented byPresented by

•Eric PetersenEric Petersen

• Pension ConsultantPension Consultant

Who can have a planWho can have a plan

• Any business entityAny business entity– Non ProfitNon Profit– C-CorpC-Corp– S-CorpS-Corp– Sole PropSole Prop– LLCLLC– PartnershipPartnership

Types of PlansTypes of Plans

Defined Contribution Defined BenefitDefined Contribution Defined Benefit ERISA 403 (b) Defined BenefitERISA 403 (b) Defined Benefit

Non-ERISA 403 (b) Cash Balance Non-ERISA 403 (b) Cash Balance PlanPlan

401-k Profit Sharing Plan401-k Profit Sharing Plan

Old plans Old plans

KeoughKeough

Money Purchase PlanMoney Purchase Plan

Types of PlansTypes of Plans

• SEPSEP

• SIMPLESIMPLE

Sponsor

TRUST

•Tax Deferred

•Safe from Creditors

•Self-Directed Investments

40% Tax Rate

EmployeeEmployer Sponsor

TRUST

•Tax Deferred

•Safe from Creditors

•Self-Directed Investments

17,500 or

23,000

H.C. N.H.C. 10 10 5 5 0 0

+ 2 %

9 ½ %

Eligibility Requirements

•Age 21•Full-Time•One Year

•Classification•Last Day

Allocate

=%

AgeAge & %

5 %7½

7%

SEP:

Percentage of Pay

Name Age Compensation Allocation Owner 50 $ 120,000 $ 30,000 Owner 55 120,000 30,000 Employee 25 50,000 12,500 Employee 35 50,000 12,500 Employee 45 50,000 12,500 Employee 35 50,000 12,500 TOTALS $ 440,000 $ 110,000 TOTAL FOR OWNERS 60,000 TOTAL FOR EMPLOYEES 50,000

Profit Sharing Plan Allocation Method:

Integrated with Social Security

Name Age Compensation Allocation Owner 50 $ 120,000 $ 30,000 Owner 55 120,000 30,000 Employee 25 50,000 10,000 Employee 35 50,000 10,000 Employee 45 50,000 10,000 Employee 35 50,000 10,000 TOTALS $ 440,000 $ 100,000 TOTAL FOR OWNERS 60,000 TOTAL FOR EMPLOYEES 40,000 Savings vs. SE: $ 10,000

Profit Sharing Plan Allocation Method:

Tiered or Cross Tested

Name Age Compensation Allocation Owner 50 $ 120,000 $ 30,000 Owner 55 120,000 30,000 Employee 25 50,000 2,500 Employee 35 50,000 2,500 Employee 45 50,000 2,500 Employee 35 50,000 2,500 TOTALS $ 440,000 $ 70,000 TOTAL FOR OWNERS 60,000 TOTAL FOR EMPLOYEES 10,000 Savings vs. Percentage of pay method: $ 40,000

Profit Sharing Plan Allocation Method:

Tiered or Cross-Tested with 401-k

Name Age Compensation Allocation Owner 50 $ 120,000 $ 30,000 + 22,000 401k Owner 55 120,000 30,000 + 22,000 401k

Employee 25 50,000 2,500 Employee 35 50,000 2,500 Employee 45 50,000 2,500 Employee 35 50,000 2,500 TOTALS $ 440,000 $ 114,000 TOTAL FOR OWNERS 104,000 TOTAL FOR EMPLOYEES 10,000 Savings vs. SEP : $ 40,000

Defined Benefit / Cash Balance :

Percentage of Pay

Name Age Compensation Allocation Owner 50 $ 120,000 $ 150,000 Owner 55 120,000 150,000 Employee 25 50,000 12,500 Employee 35 50,000 12,500 Employee 45 50,000 12,500 Employee 35 50,000 12,500 TOTALS $ 440,000 $ 350,000 TOTAL FOR OWNERS 300,000 TOTAL FOR EMPLOYEES 50,000

PAYROLL INFORMATION

Date of Date of Annual

Name Key Sex Birth Employment Compensation1

2

3

4

5

6

VestingVesting

• 6 years 100 %6 years 100 %

• 5 years5 years 80 80

• 4 years4 years 60 60

• 3 years3 years 40 40

• 2 years2 years 20 20

• 1 year1 year 0 0

Safe HarborSafe Harbor

• 3% Profit Sharing Contribution to all 3% Profit Sharing Contribution to all Eligible participantsEligible participants

• Dollar for dollar match on the first Dollar for dollar match on the first 3% of pay. 50 cents on the dollar 3% of pay. 50 cents on the dollar for the next 2% of payfor the next 2% of pay

• Both methods will satisfy Top Heavy Both methods will satisfy Top Heavy requirements.requirements.

Reactive vs. Reactive vs. ProactiveProactive

Estate PlanningEntity Formation

Buy Sell Agreements

Accounting SystemPayroll

Retirement Planning

Client calls you on April 15th

How we work togetherHow we work togetherInsert Assumptions

Contribution: Annual Amount 16,500Interest Rate: Portfolio Average Return 0.08Numbers of year to retirement 13

Current Retirement Savings 300,000

Total from Qualified Plan $354,672.39

Total Retirement Savings $1,170,559.51

Monthly Income $9,275.00 *

Annual Income $111,300.00 *

* Assumes annuity purchase

Questions to ask clientsQuestions to ask clients

• Have you been filing IRS form 5500?Have you been filing IRS form 5500?– Voluntary Delinquent Filer programVoluntary Delinquent Filer program

• Has your plan document been Has your plan document been restated?restated?– All plans must restateAll plans must restate

• Does plan require an annual Audit?Does plan require an annual Audit?– Look up clients on FreeErisa.comLook up clients on FreeErisa.com

• Top Heavy ContributionsTop Heavy Contributions