would you like to have a nice table showing all the Benefit
and Contribution Limits for the last 15+ years? Well,
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and Contribution Limits
make a selection for more valuable information:
Do I Need a Qualified Retirement Plan?
Ask yourself the following questions;
would I like to "save" for retirement with pre-tax money?
Would I like to provide my employees with a tangible employee
benefit? Would I like to deduct retirement plan contributions
and certain administrative expenses at the company level?
If the answer to any one of these questions is yes, then you
need a qualified retirement plan! It is one of the best tax
shelters available. It is almost like having the government
pay you to save for retirement. Furthermore, a retirement
plan can be specifically designed to strongly benefit business
owners and key employees. In addition, following are some
other benefits to having a retirement plan:
and retain good employees, thereby reducing employee turnover.
employee incentive and accumulate funds for retirement.
earnings accumulate tax-free until distribution.
design can maximize benefits for the owners.
insurance may be included using pre-tax dollars.
employee pays no tax on money contributed for the employee's
benefit until a distribution is made.
Type of Retirement Plan Is Best for My Firm?
Retirement plans typically fall into
two categories: Defined Benefit or Defined Contribution. A
Defined Benefit plan is more commonly known as a "pension"
plan. It provides for a monthly benefit at retirement that
is based on a formula, which typically includes compensation
and years of service. The annual contribution is actuarially
determined utilizing certain assumptions such as mortality,
interest, turnover, salary scale, etc.
Defined Contribution plan does not typically pay a monthly
benefit at retirement. Instead, an individual account is established
for each participant, into which "contributions" (funds put
into the plan by the employer or employee or both), forfeitures,
income, expenses, gains and losses are allocated. These allocated
amounts accumulate tax-free until they are distributed at
retirement, termination, disability or death. Following are
some different types of defined contribution plans, such as:
- Defined Benefit Plans
- Cash Balance Plans
or Savings Plans
Stock Ownership Plans (ESOPs)
Incentive Match Plans for Employees (Simple plans)
Employee Pensions (SEPs)
Cross-Tested and other
Do I Know Which Type of Plan We Need?
The first step is to ascertain
what objectives your firm is seeking to accomplish: hire key
employees away from competition, reduce employee turnover,
establish a market for owners' stock in a closely held corporation
and/or build a tax-sheltered retirement fund for owners and
you must decide on what level of contributions your business
would be comfortable with and able to afford on an annual
your personal objectives must be ascertained, which may include;
maximizing your retirement benefits, maximizing your contributions
and/or having annual contributions that are flexible.
after determining the foregoing objective, the type
of plan that your firm ultimately installs will depend
on a large number of factors. There is no easy answer and
a good plan design is critical in order to meet your company's
you would like more details, please contact
us via e-mail or by telephone. We will be happy to provide
you with a complete proposal, including options, costs, responsibilities
Are the Steps to Implementing a Retirement Plan?
There are several steps to implementing
a retirement plan:
process begins with a Pension Investors Corporation consultant
who will help you determine your retirement plan needs.
the information you provide, Pension Investors Corporation
will design a retirement plan that will be appropriate
to both the company's needs and the owner's needs.
will then present you and your counsel a legal document
to review and execute. This document will outline all
of the retirement plan provisions. Your Pension Investors
Corporation consultant will review the document with you,
ensure that you understand and agree with the provisions.
Once the document has been executed, it will be sent to
the Internal Revenue Service to request approval.
enrollment process may then begin. This includes providing
employees with enrollment forms, designation of beneficiary
forms, information about the new plan, answering questions,
and a special document called a Summary Plan Description.
employees have enrolled in the plan, the installation
As a third party administrator (TPA),
Pension Investors Corporation will provide administrative
services for your plan. However,
your company will also have certain responsibilities with
regard to your plan. Typically, your company's responsibilities
a Plan Design that is best for meeting company's objectives.
a written statement of plan's investment policy.
with a Third Party Administrator (TPA) to provide record-keeping
services, including measures needed to comply with Federal
the TPA with complete and accurate employee
data, including social security numbers, dates of birth,
hire and termination of employment.
plan records in a place that will provide ready access,
including plan documents, Summary Plan Descriptions and
Plan valuation reports provided by the TPA.
the plan in accordance with ERISA requirements and complying
with TPA requests regarding same.
plan to Employees. Distributing employee statements and
IRS Filing information. Distribution of Summary Plan Descriptions.
Answering employee questions.
plan contributions on a timely basis and providing TPA
with complete list of contributions with dates, amounts
and check numbers.
TPA informed as to investment strategy and any new investments,
loans, etc. This is necessary for continued compliance
with federal regulations. It is also necessary for avoidance
of penalties and interest on PROHIBITED TRANSACTIONS.
TPA with annual information regarding insurance products
purchased by the plan. This includes policy information,
premiums paid, cash surrender values, Schedule A information
and 1099's for the PS-58 costs. The insurance company
should send this information to you. It must be forwarded
to your TPA.
distribution of Plan benefits as soon as possible after
being advised by TPA of the need for such payments. Providing
TPA with copies of all participant election forms, properly
executed and dated. TPA will provide forms.
confirmation of benefit payments and tax deposits to TPA
each year. Without this confirmation, required 1099's
cannot be prepared.
a Fidelity Bond for the trust and provide complete copy
of same to TPA.
tax withholdings by the 15th day of the month following
employee contributions in plan accounts immediately after
each payroll period.
Together, Pension Investors Corporation
and your firm can establish a valuable retirement plan that
will enable you and your employees to realize a better tomorrow.
We look forward to working with you.