Post on 16-Apr-2017
Cash Balance Plans The Ultimate Hybrid
Retirement Plansfor
High Income Partners & Business Owners
Ken GoldmanSemi – Retired
former business owner
Are You Ready to Start Looking for Work Again
at 70?
Options
Survey Question
Do you know what an Pension Actuary does?
Survey Question
Do you feel that your corporate plan will provide enough money
for your retirement?
Mark DunbarFounder
There are two basic retirement plans
Defined Contribution• 401(k)• Employees contribute• Employer matches a
percentage• Unknown payout at
retirement• Self‑directed
Defined Benefit Plans
• Employer Sponsored• Original Pension Plan• The benefit (or the amount
paid out at retirement) is predetermined
• Does not depend on the employees’ contribution
Cash Balance Plans• Not Well Known• Different contribution levels
for owner vs. ‘rank and file’• Bankruptcy Protection• Clearly defined liability• Timely contribution
changes are possible
Cash Balance Plans allow for highly compensated staff to defer up to $250,000 annually.
Hybrid Cash Balance PlansDefined Contribution
Plan Defined Benefit Plan+
Hybrid Retirement
Plans
You can save up to $2.5 million
in 10 years
Tax Deferred IncomeAnnual Income of $400,000 –
the top $100,000 tax breakdown
• $100,000 – Gross Income
• ( 39,600) – Federal Tax (39.6%) the top tax rate
• ( 3,300) – Indiana State Tax (3.3%)
• ( 2,900) – Medicare Tax (both sides 2 x 1.45%)
• $ 54,200 – Take Home Pay
After Tax vs. Pre Tax Investment
$54,200 ---- 10 years @ 5% ------------ $88,300$100,000 ---- 10 years @ 7% --------- $196,700
220% Increase
Would you rather pay the money to taxes?
or
Accumulate interest on the money you would have paid to taxes.
History of Retirement Planning
1875 1913 1926
American Express Companyestablishes the first private pension plan
Congress enacts the first federal income tax law
The Revenue Act of 1926 exempts trust income coming from pension plans from an employee’s current taxable income.
1935 1974 1978
Social Security is enacted, establishing age 65 as thenormal retirement age
The Employee Retirement Income Security Act of 1974 (ERISA)
The Revenue Act of 1978 establishes 401(k) plans
2012 2016
Cash Balance Plans make up 25% of all defined benefit plans
Proposed IRS Regulations
The Pension Protection Act of 2006 (PPA) is enacted
2006
40.1 million Americans are covered by defined benefit plans and 60.4 million Americans are covered by defined contribution plans
1999
US Life Expectancy (1900 – 2010)
1900 1910 1920 1940 1950 1960 1970 1980 1990 2000 20100
10
20
30
40
50
60
70
80
90
4648
54
58
66
7071
7475
7778
Attorneys
• Insert a three partners
Three Partners
Without a Plan
Cash Balance Plans jumped 43%
$1 Trillion Nationwide
Firms with 25 or less employees have the majority of Cash Balance plans
SQUEEZE 20 YEARS INTO 10
Older Owners can squeeze 20 yrs of retirement savings into 10 yrs by utilizing Cash Balance plans.
$700,000 401(k) + $2,500,000 Cash Balance
$3,200,000
Dentist case Study #1
Retirement in Ten Years plus the Sale of a Business
$1 MillionExit
Strategy
Perpetuity Plan
Are You Ready to Start Looking for Work Again
at 70?
Your Choice…
The No Downside Offer
A comprehensive review of your current retirement planAt No Charge
9 times out of 10We improve benefits after a review
Dust Off Your Plan
Call Mark Dunbar(412) 263-0102
mdunbar@dbzinc.comrevisitmy401k.com
A copy of this presentation can be down loaded on the website.