OnePersonPlus Advisor Presentation for CPAs
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Transcript OnePersonPlus Advisor Presentation for CPAs
Defined Benefit Plans
for Medical Professionals
A Tax Strategy for High Income
Self-Employed and Small Practice Owners
Defined Benefit Plans ─ in the News
“Creating a pension plan helps business owners and the
self-employed sock away more tax-deferred cash for retirement”
Smart Money, October, 2008
“Create Your Own Pension Plan: Classic retirement
plans are an intriguing option for shielding
small-business income from the IRS”
Fortune Small Business, February 2008
“Benefits in a Pension for Now and Beyond”
November 2007
“High contribution limits and tax
benefits are big pluses for DB plans”
Investment Advisor Magazine
October 2007
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Today’s Presenter
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Advisor Name & photo
Affiliation
Expertise
Connection to audience
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Agenda
The Personal Pension Plan
– Defined Benefit Plans At a Glance
– Compared to Other Retirement Plans
– The OnePersonPlus® Program from Dedicated DB
Ideal Financial Situations
Meeting Your Needs
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Eligible Compensation
Key Dates
Fees
Opening a DB Plan
Follow through
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Defined Benefit Plans at a Glance
Qualified retirement plan approved by the IRS
Contributions are tax deductible
Highest available contributions and
tax deductions of any qualified retirement plan
Contributions are based on:
– your age
– income
– years to retirement
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Comparison of Retirement Plans
SIMPLE
SEP
Single 401(k)
$21,350
$49,000
$54,500
$134,600
DB
$171,300
DB + 401(k)
Hypothetical Example:
Maximum annual contribution limits in 2009 for a Medical
Professional age 52, earning $245,000 annually, retiring in 10 years
Assumes 5-7% funding rate for Defined Benefit Plans
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Defined Benefit Plans are Goal-oriented
Goal or “benefit” represents the amount of retirement
wealth the plan will provide annually at retirement age
Benefit is established when plans are opened
– Based on age, income and years until retirement
– Capped at $195,000 per year (for 2009)
Employer commits to achieving the goal through regular,
annual contributions large enough to meet the goal
Retirement age is typically set at age 62 or older
Plan can be amended to change the goal
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OnePersonPlus from Dedicated DB
A Great Tax Strategy for Baby Boomers!
Typical Plan Sponsors
• Medical professionals, age 45-70
• Owner + up to 4 employees
• Expect to Contribute 5 successive years
New Plans
• Avg. annual contributions: $120,000
• Avg. term: 9+ years
• Integrates with a solo 401(k)
Dedicated DB’s Service
• Prototype plan documents eliminates cost of actuary, tax attorney
• Easy to open, efficient to administer – 2-page adoption agreement, simplified forms,
pre-filled annual census
• Set up fee and annual administration fee
• No administration fees based on size of your account
You and Your Financial Advisor Select the Investments
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Dr. Charles, Owner-only, Age 52
Sole proprietor, Wants Maximum Tax Deduction
Annual earnings: $400,000
Maximum DB+ 401(k) contribution for 2009: $171,300
– Contribution to DB Plan: $134,600
– Contribution to 401(k):
$36,700
Annual tax savings: $65,100
– Combined marginal tax rate of 38%
DB Accumulation at age 62: $2.36 Million
– 10 years, 5 - 7% rate of return
Annual DB Benefit: $195,000
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The Impact of Age on Contribution:
The Older, The Better
Doctor Charles
Age 52
10 Years to Retirement
Compensation: $400,000
DB Contribution: $134,600
Annual Benefit at
Retirement:
$195,000
Doctor Tim
Age 35
27 Years to Retirement
Compensation: $400,000
DB Contribution: $16,200
Annual Benefit at
Retirement:
$195,000
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Paul, Age 60, Mary, Age 58
Anesthesiologists, C-Corp
Married Couple in Business Together
5 years from retirement
W-2 Income: $490,000 ($245,000 each)
Total annual DB contribution: $351,800
$171,800 towards Paul’s retirement
$180,000 towards Mary’s retirement
Annual combined income tax savings: $133,700
Accumulation at retirement:
Paul: $1.1 Million
Mary: $1.16 Million
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Mollie, Dentist, Age 55
+2 Employees
Dentist, C-Corp
Owner’s W-2 income: $400,000
Employee 1 age 28 earning $35,000
Employee 2 age 35 earning $45,000
2009 DB contribution for owner: $162,400
DB Contribution for Employee 1: $4,000
DB Contribution for Employee 2: $8,100
93% of contribution for Mollie
Annual income tax savings for Mollie: $61,700*
Retirement accumulation for Mollie at 62: $1.65 Million
*Assumes 38% combined state/federal marginal rate
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Walter, Age 60, Professor at Med School
Wants to Secure Retirement
with Side Income, Sole Proprietor
In addition to university salary, Walter has self-employment income from
consulting & serving on 2 biotech boards
Annual self-employment earnings: $100,000*
DB contribution for 2009: $80,000
Annual tax savings: $30,400
combined marginal tax rate of 38%
DB Accumulation at age 65: $513,600
5 years, 5 - 7% rate of return
* High 3-year average, after payment of self-employment taxes
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Kumar, Age 48, Radiologist, C-Corp
Wants high contributions in 2009 but needs
flexibility as his income fluctuates
2009 W-2 earnings: $135,000
Maximum DB contribution for 2009: $51,800
+ 401(k) contribution for 2009:
$24,600
Total deduction in 2009:
$76,400
2009 tax savings: $29,000
– combined marginal tax rate of 38%
DB Accumulation at age 62: $1,630,000
– 14 years, 5 - 7% rate of return
Annual DB Benefit: $135,000
Copyright 2009 Dedicated Defined Benefit Services LLC
Eligible Compensation for a DB Plan
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Key Dates
DB Plans must be opened by the end of your fiscal
year, for most businesses that will be December 31st.
The Investment Account will be opened once the
Adoption Agreement is signed. If you open the plan
before year end, we recommend investing no more
than 50% of the assets before you have your final
year-end income statement.
The investment account must be funded when taxes
are filed but no later than eight and a half months after
the end of your fiscal year.
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Fees
Defined Benefit Plan
DB Plan Set up: $1200 plus $50 per participant
DB Annual Administration: $1600 plus $100 per
participant
OR
Defined Benefit & 401(k)
Plans Set up: $1400 plus $50 per participant (owner
and spouse only)
Annual Administration: $2050 plus $200 per participant
(owner and spouse only)
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Establishing a Plan
1. We can run a feasibility proposal for you
2. Bring your accountant into the discussion early
3. Once the plan meets your objectives, we’ll complete a
Set-up Questionnaire
• Send signed Questionnaire to Dedicated DB
• With Set-up Fee
4. We’ll send you an Adoption Agreement to sign
5. You can begin to fund the investment account
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