Type of Qualified Retirement Plan for high net income pros and business owners

Owner

Goal

 

Employees

(Non-Owner)

Plan Type

Requirements

Advantages

Older Than Employees

Maximize Contributions, Deductions & Benefits

0-4

Fully Insured Defined Benefit Plan,

also known as a

412(e)(3) Plan

Steady Profits: Business generates enough income to support ongoing plan contributions,. Plan funding required each year.

Highest Possible Contribution, Deduction & Benefits. All Plan Assets Held in Guaranteed Annuity/Insurance Contracts. Recession Proof.

5+

Traditional Defined Benefit Plan

Relatively Steady Profits: Business generates enough income to support ongoing plan contributions. Plan funding required each year.

Higher Contribution and Deduction than DC Plans, Lower Deduction than Fully Insured Plan, Investment Fund for Potential Asset Growth.

Older Than Employees&

Salary Over $208,000

Flexible Contributions

0

Traditional Profit Sharing Plan

Maximum Total Plan Contribution is 25% of Participating Payroll.

Flexible Contributions, Lower Contribution than a Defined Benefit Plan, Maximum Individual Allocation is $52,000*.

1+

New Comparability Profit Sharing Plan

Maximum Total Plan Contribution is 25% of Participating Payroll.

Flexible Contributions, Lower Contribution than a Defined Benefit Plan, Age-weighted Allocations, Maximum Individual Allocation is $52,000*.

Older Than Employees &

Salary Under $208,000

Flexible Contributions

0

Traditional Profit Sharing/401(k) Plan

Maximum Total Plan Contribution is 25% of Participating Payroll Plus Deferrals.

Flexible Contributions, Lower contribution than a Defined Benefit Plan, Maximum Individual Allocation is $57,500*

1+

New Comparability Profit Sharing/ Safe Harbor 401(k) Plan

Maximum Total Plan Contribution of 25% of Participating Payroll Plus Deferrals

Flexible Contributions, Lower contribution than a Defined Benefit Plan, Maximum Individual Allocation is $57,500*,

Age-Weighted Allocations

Younger &

Salary Under $208,000

Maximize Deductions & Benefits

0

Traditional Profit Sharing / 401(k) Plan

Maximum Total Plan Contribution is 25% of Participating Payroll Plus Deferrals

Flexible Contributions, Maximum Individual Allocation is $57,500*

1+

Integrated Profit Sharing/ Safe Harbor 401(k) Plan

Flexible Contributions, Maximum Individual Allocation for is $57,500*, Allocations weighted by salary

Younger &

Salary Over $208,000

Maximize Deductions & Benefits

0

Traditional Profit Sharing Plan

Maximum Total Plan Contribution is 25% of Participating Payroll

Flexible Contributions, Maximum Individual Allocation is $52,000*

1+

Integrated Profit Sharing/Safe Harbor 401(k) Plan

Owner’s Salary Higher than Employees’ Salaries, Maximum Total Plan Contribution is 25% of Participating Payroll Plus Deferrals

Flexible Contributions, Maximum Individual Allocation is $57,500*, Allocations are weighted by salary

Any Age

Minimize Cost for Other Employees

1+

Profit Sharing/Safe Harbor 401(k) Plan with Matching Contributions Only

For businesses with employees who do not defer at all or defer very little, No required contributions except for Safe Harbor Matching Contributions which are 100% vested.

No contributions required on behalf of employees who do not defer, Maximum Possible Individual Allocation in 2014 is $33,400**

———————————

Free 30min phone chat with a sr financial advisor at Harding Financial to help you reduce income taxes using a business structure and financial strategies, connie.dellobuono@hardingfinancial.com or conniedbuono@gmail.com 408-854-1883

Make 2014 and 2015 be the year to protect your wealth and secure your retirement.

Connie Dello Buono
Jr Financial Advisor
hardingfinancial.com
Happy Holidays! Take care of your income taxes before the year ends.

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