Retirement Planning

Qualified Plans

Qualified plans are employer sponsored retirement plans, usually profit sharing based, that are governed by ERISA and therefore are subject to its discriminatory testing requirements. n recent years these plans have become easier to establish and maintain. The cost associated with running them has come down significantly even as the features have continued to improve due to a very competitive market.

Some of the available plans are:

Money Purchase Plans/Profit-Sharing Plans
401(k) (Age Weighted, New Comparability, SafeHarbor, Profit Sharing)
Individual 401(k)
403(b)
457
412(i)

Non-Qualified Plans Non-Qualified Deferred Compensation is a generic term used to describe a compensation arrangement that provides retirement income and perhaps death benefits to key employees. If the key employee is also the owner of the business, these plans are restricted to C corporations.

Following are several non-qualified plans:

COLI (Corporate-Owned Life Insurance)
Executive Bonus
Split Dollar
Section 79

Individual Retirement Accounts IRA based plans are retirement plans that are not governed by ERISA and therefore are not subject to its discriminatory testing requirements. These plans are generally easy to establish and maintain, and the costs associated with them can be very low.

IRA plans that can be established include:

Traditional / Rollover
Roth
SEP
SIMPLE

Personal Savings

Personal Savings can be an important part of an overall retirement plan. Unlike qualified plans, gains in personal savings accounts are taxed as they are earned. While this may impact the long-term growth of the funds, it also means that most of the taxes have already been paid when you get ready to use the money for retirement living expenses. This can be significant for investors with large retirement incomes who have remained in high income tax brackets.

Distribution Planning

Planning a distribution strategy is an important part of a retirement plan. Making sure that existing investments are providing enough current income, as well as continued opportunity for growth can be challenging. In addition, coordinating the tax impact of many different types of income can be confusing for the most sophisticated investor.

During retirement, sources of income and distributions can include:

Pension, 401(k), 403(b)
IRA, Roth IRA
Interest, Dividends, Capital Gains
Social Security
Earned Income

Executive Compensation

Non-Qualified Deferred Compensation is a generic term used to describe a compensation arrangement that provides retirement income and perhaps death benefits to key employees. If the key employee is also the owner of the business, these plans are restricted to C corporations.

Following are non-qualified plans:

COLI (Corporate-Owned Life Insurance)
Executive Bonus
Split Dollar

At the heart of any retirement plan is the distribution of accumulated assets. The correct distribution method will help to ensure that your retirement savings last beyond your lifetime with minimum shrinkage from taxes. From premature distribution options that allow access to retirement assets prior to age 59 1/2;, to products intended to provide stable monthly payments for retirement, distribution planning is paramount to a successful retirement plan.