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412 Split Funded Defined Benefit Plan
Simplicity - High Income Tax Deductible Contributions - 5 Year
Funding
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Pension Professionals Hybrid 412
Pension Plan Design
As with most financial strategies, there are substantial tradeoffs. However,
there is one strategy that allows business owners and professionals to achieve
all the major objectives listed above - Pension Professionals' (PPI) Hybrid 412
Plan.
In addition to supporting the above-listed objectives, the PPI Hybrid
Plan design is supported by:
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Determination letter from the IRS |
When the advantages available under 412 are combined with an
optional strategy for a buyout and exchange of the life insurance policy (under
section 1035) for a better performing policy or another investment alternative,
a taxpayer gains the ability to access large amounts of tax-free
distributions during retirement, asset protection and wealth transfer.
Example 1 - Comparison of Qualified Plans
Dentist and wife:
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Both age 55 years
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Owners salary - $225,000 for dentist, $55,000 for wife
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Employees combined salary (5 employees) - $162,000
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Corporate entity is an S Corporation with $500,000 in
net income
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| Type of Plan |
Maximum Deduction |
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Profit Sharing
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$99,250
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Comparability
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$108,630
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Traditional DB
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$300,021
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Defined Benefit Plan
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$531,593
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Hybrid 412 Plan (92% Owner)
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$369,959
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Death Benefit
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$2,620,000
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The resulting after-tax cash flow is $4,500,000. The additional advantages are
asset protection and wealth transfer benefits.
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Maximize Business Deductions and Secure
Retirement Benefits
The Pension Professionals Hybrid 412 Plan is a unique retirement plan
for business owners and professionals offering large deductible contributions,
steady, tax-deferred earnings, optional tax-free distributions, while minimal
contributions employers must allocate to their employees. Financial and
retirement planning objectives that many business owners and professionals have
volunteered to us include:
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Maximize employer and key
employee contributions on a pre-tax basis
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| 2. |
Minimize contributions for funding
employee benefits
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Significantly reduce or eliminate
estate taxes
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| 4. |
Access retirement benefits on a
tax-favored basis (i.e. not merely defer the tax)
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| 5. |
Protect retirement assets from
creditors
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| 6. |
Achieve substantial wealth transfer if
estate taxes are a consideration
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| 7. |
Avoid stock market volatility with
guaranteed returns
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| 8. |
Integrate the strategy with other life
and estate issues.
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Highest Allocation to You
We can re-design an existing plan. The following table shows the same
case study from the previous page, showing the alternatives for a practice of a
55 year old dentist who employs his wife, five other employees and uses a PPI
Hybrid 412 Plan and a profit sharing plan:
The Highest Allocation to You ( Safe Harbor Design)
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Or - if you presently have a 412 plan you may want to look at a redesign with
conversion to a Split Funded Defined Benefit Plan with an exit strategy.
For more information call 800.433 .9667 or 800.808.4020
Contact The Pension Professionals of Florida today for a
FREE 412 Split Funded Defined Benefit Plan Feasibility Study to determine how a
412 Split Funded Defined Benefit Plan Defined Benefit Plan can benefit you and
your employees.
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