Self-Directed Solutions for

Small Business Owners

SEP IRA

SIMPLE IR

A

SOLO 401(K

)

© Kingdom Trust 2015KingdomTrust.com

Introduction 2If you own a small business or are self-employed, know that you have options beyond Traditional or Roth IRAs and defined contribution plans. Many employers offer defined contribution plans, which may include various 401(k) and profit-sharing plans. Some employers also offer defined-benefit plans such as pensions and cash balance plans. There are even some that offer non-qualified retirement plans such as a deferred-compensation plan.

Employer-sponsored plans are very useful to employees because they often provide tax breaks and automatic retirement savings methods and may even involve employer matching, essentially providing them with free money. However, many small business owners face high startup and operating costs and complex administration functions with conventional employer plans, which leads many of them to seek out alternatives.

While Kingdom Trust is not in the advice business and doesn’t recommend one plan over another, we regularly work with business owners on opening the accounts that best fit their companies’ needs. We also educate prospective account holders on the various retirement account types that can be held on the Kingdom Trust platform.

In this eBook, we will discuss a few qualified retirement plans that can be self-directed and that Kingdom Trust can custody, specifically the SEP IRA, the SIMPLE IRA and the Solo 401(k).

Why should my business choose a Self-Directed IRA?

Ever since the creation of the Individual Retirement Account (IRA) in 1974, individuals have been able to self-direct retirement funds. “Self-Directed IRA” is actually a marketing term used to point out how you have more control over the direction of your retirement funds.

With a truly Self-Directed IRA, you aren’t limited to exchange-traded investments. You can invest in alternative assets like

real estate, precious metals, private companies, promissory notes and other private lending, crowdfunding opportunities, and so much more. The list is almost endless!

Diversification and control are the keys with Self-Directed IRAs. By diversifying with alternative assets, your investment portfolio may be better protected against market fluctuations and can be broadened into asset classes

that you understand or have experience with. Plus, if you wish, you can invest in traditional assets like stocks, bonds, mutual funds, and CDs alongside alternatives!

Please keep in mind that ALL investments, traditional and non-traditional, carry risk that can include loss of principle and/or return.

© Kingdom Trust 2015KingdomTrust.com

SEP IRA An easy, flexible, low-cost and less-complex retirement plan akin to a Traditional IRA but with significant differences.

A Simplified Employee Pension (SEP) is basically a Traditional IRA allowing business owners, including the self-employed, the ability to make tax-deductible contributions for themselves and their employees. However, it is different from a Traditional IRA when it comes to contributions. Only the employer can contribute to the SEP, and employees must meet the following eligibility requirements:

Must be at least 21 years of age

Contribution limits for a SEP IRA could be significantly larger than Traditional or Roth IRA contribution limits.

Must have worked for the employer in three of the last five years

Must have received at least $600 in compensation annually (as of 2015)

Employers can contribute of an employee’s compensation, with a maximum of for 2015.*

up to 25%

$53,000

3

$373 BILLIONIN ASSETS

According to the Investment Company Institute, the estimated value of assets held in SEP IRA accounts was $373 billion in 2014.1

LOWER COSTS,LESS COMPLEX

Startup/administrative costs for SEP IRA plans are lower than with conventional employer plans. Administration is also less complex than that of 401(k) or other traditional employer plans.

FORM5305-SEP

If an employer uses Form 5305-SEP as the formal written agreement when establishing the SEP, no IRS approval or determination letter is required.

ESTABLISHIN 3 STEPS

execute a formal written agreement to provide benefits to all eligible employeesprovide SEP info to the employeesestablish a SEP IRA for each eligible employee

IRS

* Employers don’t have to contribute the same amount each year, which may help during lower cash flow years.

© Kingdom Trust 2015KingdomTrust.com

SIMPLE IRA A flexible, low-cost and less complex retirement plan designed specifically for smaller businesses.

A Savings Incentive Match Plan for Employees (SIMPLE) is a salary-reduction retirement plan for businesses with 100 or fewer employees or self-employed individuals. Employers who maintain a SIMPLE IRA cannot contribute to any other employer-sponsored retirement plan in the same year. The employer must contribute to the SIMPLE, but employees may also contribute. Employees (including the self-employed) must meet the following eligibility requirements to participate:

Must expect to receive at least $5,000 during the current calendar year

Contribution limits for a SIMPLE IRA could also be larger than Traditional or Roth IRA contribution limits.

Employees can choose to make contributions up to for those 50 and under,for those over 50 (2015).

Employers can choose to match contributions up to 3% of compensation or 2% of compensation in non-elective contributions with no matching.*

$12,500

* As with the SEP IRA, employers don’t have to contribute the same amount each year. Please see the IRS rules regarding SIMPLE IRA contributions, as certain rules and requirements apply.

Must have earned at least $5,000 in compensation during any two years before the current calendar year

$15,500

4

$99 BILLIONIN ASSETS

According to the Investment Company Institute, the estimated value of assets held in SIMPLE IRA accounts was $99 billion in 2014.1

LOWER COSTS,LESS COMPLEX

Like SEP IRAs, startup and administrative costs for SIMPLE IRA plans are lower than with conventional employer plans. Administration is also less complex than that of more traditional plans.

FORM 5304-SIMPLE OR 5305-SIMPLE

IRS rules allow two types of SIMPLE plans, with each implemented using a specific form. 5304-SIMPLE allows each employee to select a custodian for his or her account, while 5305-SIMPLE does not.

DEDUCTIBLEEXPENSES

If matching employee contributions, the employer can deduct those matching contributions as a business expense.

IRS

© Kingdom Trust 2015KingdomTrust.com

Solo 401(k) A retirement plan designed for a business owner with no employees, or with just that person and his or her spouse. 5

Not sure an IRA is right for your business? Kingdom Trust offers other solutions for business owners interested in either Self-Directed IRA services or custody solutions, including the Solo 401(k) plan for the self-employed. Also called the One-Participant 401(k), Individual 401(k) or Solo-k, the Solo 401(k) functions like a Traditional 401(k) plan, except that the self-employed can make a contribution both as employee and as employer. In order to participate, employees must meet the following requirements:

-

Must be either self-employed or own a business with the owner and his or her spouse as the only employees

Must have earned taxable compensation during the calendar year

Contribution limits for a Solo 401(k) could also be significantly larger than Traditional or Roth IRA contribution limits.

Employees can choose to make contributions up to for those 50 and under,for those over 50 (2015).

Employers can contribute of an employee’s compensation, with a maximum of in total contributions for 2015.

$18,000 $24,000

up to 25%

$53,000

CONTRIBUTIONOPTIONS

Self-Directed Solo 401(k) plans may also accept pre-tax or after-tax (or Roth) contributions, the latter of which having no income restrictions (unlike normal Roth IRA accounts).

BORROWINGPOTENTIAL

Unlike with brokerage-based plans, the Solo 401(k) participant may be able to borrow the lesser of $50,000 or 50% of his or her 401(k) account value. Plus, the loan can be used for any purpose.

FORM5500-EZ

Generally, a Solo 401(k) plan is required to file an annual report on some version of Form 5500-EZ if it holds $250,000 or more in plan assets. This is for reporting purposes only and does not require payments.

ALTERNATIVECAPABILITIES

A Self-Directed Solo 401(k) plan allows investments in alternative assets like real estate and precious metals, which you won’t find with most brokerage-based plans.

IRS

© Kingdom Trust 2015KingdomTrust.com

SEP IRA

SIMPLE IRA

Solo401(k)

Review 6

Borrowing potential designed for sole proprietors or businesses that only employ the owner and his or her

spouse largest contribution for businesses without employees

Contribution flexibility designed for small business owners with 100 or fewer employees salary reduction plan can

contribute for yourself as well as your employees

Owner can contribute for self as well as employees designed for business owners of various sizes, including the self-employed low administrative costs flexibility to change annual

contributions each year

© Kingdom Trust 2015KingdomTrust.com

Conclusion

Are you considering an alternative to the complexity and expense of conventional employer plans?

7

We are often asked, “How do I know which IRA is best for me?” Our answer has been the same throughout our history: you should always discuss your particular situation with a tax or accounting professional prior to making a choice.

Along with contribution limits, deadlines, eligibility requirements, and other retirement plan information, in the case of alternative investing, every investor should also know as much as possible about disqualified persons, prohibited transactions, unreleated business income tax (UBIT) and unreleated debt-financed income (UDIF). Kingdom Trust is a neutral third party to any type of investment decision or opportunity.

Kingdom Trust is here to help you determine which retirement plan may be right for you and your business and to help you get started with a new Kingdom Trust account. We regularly assist business owners with opening accounts that best fit their companies’ needs, and we take every opportunity to educate prospective account holders on the various retirement account types that can be held on our platform.

Anyone with an old 401(k), brokerage firm IRA or defined benefit plan can move those funds into a Kingdom Trust Self-Directed IRA, and those currently without any retirement plan can simply make a contribution to open a new account. Accounts can be funded via annual contributions, a rollover from a qualified plan or other IRA, or a direct IRA-to-IRA transfer.

Do you already have one of these plans or another IRA plan that doesn’t allow self-direction? You can transfer all or part of those retirement funds to a Kingdom Trust Self-Directed IRA without penalty! Contact us today for help getting started.

Regardless of the size of your business, you have opportunities with Self-Directed IRA plans and alternative asset investing that can contribute to

Kingdom Trust is registered and regulated in the state of South Dakota as a non-depository trust company. Kingdom Trust is a passive, non-discretionary custodian

that does not provide, promote, endorse or sell investment products and

does not endorse or promote any individual investment

advisor or investment sponsor.

retirement savings for you and your employees. You now have the means to start comparing the plans mentioned in this eBook and discussing with your tax or accounting professional which plan may be easiest to set up and manage and which may be best for your unique situation.

Please note that the information herein should serve only as a brief primer on the SEP IRA, SIMPLE IRA and Solo 401(k) plans and should by no means be considered advice on whether any is right for your individual situation.

KINGDOM TRUST

1105 State Route 121 N., Suite B

P.O. Box 870

Murray, Kentucky 42071

Office: 270.226.1000

Toll-Free: 888.753.6972

Info@KingdomTrust.com

Follow Us

Visit our website for more educational opportunities and resources: KingdomTrust.com

For more educational resources on retirement plans for small businesses, visit any of the following:

Choosing a Retirement Solution for Your Small Businesshttp://www.dol.gov/ebsa/publications/choosing.html

One-Participant 401(k) Planshttp://www.irs.gov/Retirement-Plans/One-Participant-401(k)-Plans

SIMPLE IRA Planhttps://www.irs.gov/Retirement-Plans/Plan-Sponsor/SIMPLE-IRA-Plan

Simplified Employee Pension Plan (SEP)http://www.irs.gov/Retirement-Plans/Plan-Sponsor/Simplified-Employee-Pension-Plan-(SEP)

Small Business Retirement Plan Resourceshttp://www.irs.gov/Retirement-Plans/Plan-Sponsor/Small-Business-Retirement-Plan-Resources

NOTES

1 Report: The U.S. Retirement Market, First Quarter 2015 (xls) https://www.ici.org/info/ret_15_q1_data.xls