Sub Headline: ERISA Plans Can Add Significant Value to Employers Benefits Plans

Synopsis: Employers are always seeking an edge in employee recruitment and retention. So many companies offer ERISA qualified retirement plans in their company benefits to attract and maintain a solid work force and take advantage of the tax-favored treatment. Watch the video interview with retirement expert Jodie Dailey, CRS, QPA, ERPA.

Content: Defined Benefit Plans are one of the most useful of all retirement plans that can favor the older business owner with large income tax deductions while securing significant retirement and estate benefits. This is a brief outline of the potential benefits of these plans. Actual benefits must be calculated and certified by a qualified actuary.

General Plan Design: These plans work best when the business owner(s) are older than the general employee population. A Defined Benefit Plan favors older employees because larger contributions are required in light of the shorter time to retirement. Contributions are mandatory each year based on the plan’s benefit formula, unless that formula is amended prior to the accrual of any benefits during the plan year (i.e. first few months of the plan year) or if the plan is terminated. These plans are best suited for those companies that have consistent profits and have a need for ongoing business tax deductions.

Integration of a Defined Benefit Plan with a 401(k) Plan: We will strive to have the benefits of the non-key employees funded in the 401(k) plan, while the Defined Benefit plan will fund the benefits for the owners and older employees.

Plan Contributions by the Company: The amount of the required plan contribution can be almost any amount the employer wants up to the legal limits. Generally, each plan year, the employer is provided a minimum/maximum range of funding for the plan. In addition, employee demographic is critical in the plan design as factors such as employee turnover can have a major impact on plan design. This is why we ask for detailed census information each plan year.
Plan Contributions for Owners: When we design the plan we will always try to maximize benefits and contributions for the owners. The plan design will be set at the amount the employer can comfortably budget. However, when we look at how large the contributions might be for the owners of the company, potentially their allocation may be as high as $400,000 to $500,000 per year per owner. We can design the contribution to be almost any amount within limits, but most owners like to make it as high as possible.

Contributions for Employees: The amount of the contribution for employees can vary, but we always try to minimize this while still keeping the plan in compliance with the non- discrimination rules.
Retirement Benefits: The retirement plan is exempt from corporate and personal creditors while providing unparalleled retirement income security for all employees.

Business Benefits: There are methods whereby the retirement plan can supplement the Exit planning and Buy Sell planning for the business owners. Along with the value of the owner’s company, this retirement plan can become one of the largest assets for the business owner. We want to make sure the plan fits his/her personal planning needs as well as his/her business needs.

Tax Risks: The plans are guided by IRS approved plan documents. In addition, upon set up of a plan the plan documents are filed with the IRS and a Determination Letter is requested. Every precaution is taken to design and run the plan within the laws and regulations governing them.

Jodie Dailey is a co-contributor to this press release.

Syndicated financial columnist, talk show host and popular platform speaker Steve Savant interviews retirement expert Jodie Dailey. Steve Savant’s Money, the Name of the Game is an hour-long financial talk show for financial professionals distributed online in 5 ten-minute video press releases Monday through Friday through Trans World News 280 media outlets, social media networks and industry portals. (www.lifesizesolutions.com) …(read more)

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Qualified Retirement Employer Plans – Steve Savant’s Money, the Name of the Game – Part 1 of 5

When preparing for retirement, it’s important for individuals to understand the importance of employer-sponsored retirement plans. These plans, known as qualified retirement employer plans, are a vital component of many individuals’ retirement savings strategies. In this five-part series, we will explore the various aspects of qualified retirement employer plans and how they can help individuals prepare for a financially secure retirement.

Qualified retirement employer plans are retirement savings plans that are offered by employers to their employees. These plans come in various forms, including 401(k) plans, 403(b) plans, and pension plans. One of the key benefits of these plans is that they offer significant tax advantages, allowing employees to save for retirement in a tax-efficient manner.

One of the most common types of qualified retirement employer plans is the 401(k) plan. These plans allow employees to contribute a portion of their pre-tax income to a retirement savings account. In addition, many employers offer matching contributions, which can significantly boost employees’ retirement savings over time.

Another type of qualified retirement employer plan is the 403(b) plan, which is typically offered to employees of nonprofit organizations, schools, and other tax-exempt organizations. Similar to 401(k) plans, 403(b) plans allow employees to contribute a portion of their pre-tax income to a retirement savings account.

Pension plans are another type of qualified retirement employer plan, although they are less common in today’s workforce. These plans provide employees with a guaranteed income during retirement, based on their years of service and salary history.

In addition to these plans, there are also other types of qualified retirement employer plans, such as profit-sharing plans and employee stock ownership plans (ESOPs). Each of these plans has its own unique features and benefits, and it’s important for individuals to understand how they work and how they can help them save for retirement.

In the next part of this series, we will explore the tax advantages of qualified retirement employer plans and how individuals can make the most of these plans to save for retirement. Stay tuned for more valuable information on this important topic.